Tuesday, 28 February 2017

A sledgehammer to miss the nut

We have heard much from business about the need to maintain a steady flow of cheap and exploitable labour. We have heard this before from the mill owners in the 70's. The influx from Pakistan was a means of replacing British workers instead of automating. But then things changed, UK textiles were no longer competitive and not long after the mills were gone. West Yorkshire is littered with disused mills. One might pause to wonder if we would still have a textile industry had the sector been forced to modernise earlier.

As to EU workers, we find that agriculture is front and centre. We are, however, moving into the age of farm "drones" and high tech agribusiness. Ending freedom of movement could well be the turning point. But what of those jobs for young British high flyers?

Well, see the thing is, European business does not look overseas unless they need to. If you are bringing in people for a job you still need to help with relocation and there are costs and delays associated with it. Business, however, is willing to pay for the right people - and where there are skills shortages, businesses are already looking beyond the confines of the EU and they are already on top of deciphering visa rules. For sure, ending freedom of movement may make things a little more bureaucratic but this is not exactly a show stopper.

For sure, it is a pity to lose the automatic right for anyone to up sticks on a whim, but people do it nonetheless and it doesn't seem to stop half of my friends buggering off to Indonesia or Brazil. Where there's a will there's a way.

More to the point, where UK business is concerned, if they want cheap labour then they are not recruiting from the EU if they can get away with it. European fishing boats are well known for flouting visa rules to employ Filipinos.

The point, I suppose, is that people and business will continue to adapt. As to rights of those already here, the system is already quite generous. People may not be bargaining chips but visas are.

The travesty of all this though is that nobody serious seems to think that ending freedom of movement will substantively reduce immigration. Worse still, if we want to compensate for the loss of trade by way of leaving the single market, it follows that we will need to relax visa requirements elsewhere.

Some suggests that this is where a CANZUK arrangement could be beneficial. The problem there is that we have to ask if they are offering anything worth having. Trade volumes are likely to stay about the same. If we are looking at it from a wealth perspective then we must do so on the basis of skills, in which case, India is high up on the list.

Amid growing anxiety over the Trump administration’s possible revamp of the H-1B program, other countries around the world are putting the minds of Indian engineers at ease. Taking note of its role as the de facto near-shore centre for US operations, Mexico is more than willing to ramp up its intake of Indian talent. In an interview with Indian Express this month, Mexico’s ambassador to India, Melba Pria, called the city of Guadalajara "a technology hub with the presence of at least 10 major Indian IT companies like TCS and Infosys".

Put simply, if there is talent at a loose end then Britain needs to be in there. One should note that one of the stalling factors of the EU-India deal was the UK's resistance to visa relaxation with India due to immigration concerns. We are now faced with a dilemma. If the UK doesn't open up to India, the EU most certainly will. If we want to be a tech hub and still relevant to Europe then the choice is obvious.

In that regard if Kippers are worried about foreigners moving in and taking their jobs, it is more likely that an Indian is going to take a white collar job than casual labour from the continent. They haven't thought this through.

The truth of the matter is that ending freedom of movement was never going to be a silver bullet for immigration. At best it sees a reconfiguration of people flows, in which there will be a more noticeable shift in patterns with yet more new influxes of people from unfamiliar regions. What does it solve?

Personally I couldn't care less. Immigration is not a burning issue for me. The bits that need fixing are not fixed by tinkering with border controls and ending freedom of movement. When it comes to abuse of human rights rules I could go the full Alf Garnett but that's a different issue.

What is central to this though is not the economic fallout of ending freedom of movement. Industry will adapt. It's that we are doing this for entirely spurious reasons for non-existent benefits. Freedom of movement is not open borders. Farage and the Kippers are not going to be appeased by ending it so it's useless to try. In attempting to appease the unappeasable we are excluding ourselves from the single market at great cost thereby damaging the livelihoods of Brits while ultimately failing to tackle immigration. Why?

As to why I have not joined the ranks of those cross party operations seeking to safeguard the rights of EU citizens already here in the UK, my view is that anyone who has been here for years could have applied for a passport at any time. I don't have that much sympathy. The last six months, though, should have been used to to make a principled defence of freedom of movement.

Many Brexiteers would be keen to point out that sovereignty and "taking back control" mattered more to them than controlling immigration. Those who seek self sabotage are in the minority and there is no reason why their disingenuous campaigning should be taken into account. Nobody has yet presented an honest case as to why ending freedom of movement fixes anything - nor have I seen a convincing case that leaving the single market in such a cack-handed way is worth it. That is the tragedy of this whole enterprise. Somehow respecting the result also seems to mean giving a free pass to a government intent on shooting us in the foot.

Monday, 27 February 2017

I hate to say it but John Major is right.

John Major has said today “I have watched with growing concern as the British people have been led to expect a future that seems to be unreal and over-optimistic,” Major said, speaking at the Chatham House thinktank. “Obstacles are brushed aside as of no consequence, whilst opportunities are inflated beyond any reasonable expectation of delivery.”

I have a singular dislike of this individual but what he says is entirely correct. Just lately on the blogs we have been looking at customs systems and inspections. Presently we have an easy ride of it by way of being in the single market but as we become a third country we are bound by all the same rules as third countries which means the inspection workload on French Border Inspection Posts is going to quadruple at the very least.

These such facilities have only just been expanded to cope with existing traffic - a process which has taken a number of years. Meanwhile a Times journo remarks over email "When I mentioned the capacity question to the French department of agriculture in October they gave a somewhat insouciant response that "as article 50 hasn't been invoked we have plenty of time to adapt the facilities as needs be".

This is shaping up to be a major crisis. Without BIP facilities, we need to be under no misunderstanding. Exports to the EU of food products, animal feeds and much else will stop dead. Only if the French (and others) mount a massive development programme will there be any chance of us being able to keep up our exports, and it is quite evident that they are not even going to try. Electorally, it will be very popular with their farmers if the French government just sits on its hands.

I always argued that leaving the EU would be a means to expand and augment our trade but in so doing it was vital to protect existing trade with the EU. In its near total incomprehension of how trade works, this government has recklessly gambled our entire agriculture sector and even though there are a number of new measures that facilitate better trade with the rest of the world, there is little chance it will compensate for what we stand to lose.

The chancellor, Philip Hammond, told a German newspaper recently that if offered a raw deal by the other 27 member states, Britain was “not going to lie down and say, ‘Too bad, we’ve been wounded.’ We will change our model”.

Major, though, said a shift to a low-tax, more deregulated economy, trading on World Trade Organisation rules – as some Brexiters would like – would mean a fundamental rewriting of the economic rules that would be unlikely to win the public’s backing.

“There is a choice to be made, a price to be paid,” he said. “We cannot move to a radical enterprise economy without moving away from a welfare state. Such a direction of policy, once understood by the public, would never command support. It would make all previous rows over social policy seem a minor distraction.”

As yet, there is no indication that we will end up operating to the WTO baseline. It is widely understood that this would be a worst of all worlds scenario. It is not even government policy. There are, however, a number of pinch points where this could happen by accident. In this, Major is quite correct in that we would require a fundamental rethink of the economy.

That may well be what many voted for but it would more than likely make the Thatcher reforms seem as mere tinkering. There will be major fallout. Without a transition it would be nothing short of a disaster. But then even if talks go well and we successfully negotiate our status as a third country, EU member states will likely add in conditions that prevent us from taking unilateral acts establishing us as a European tax haven. Our choices may be limited.

I know it seems like the very last person in the universe we should be listening to is John Major, but this is now the common view among anyone who has ever had any serious involvement in the real business of government. It beggars belief that the panglossian nonsense of Brexiteers goes unchallenged. Brexiteers themselves have given the government a free pass leaving only discredited remainers offering up any serious criticism. Consequently we are sleepwalking into a Brexit nightmare. This could get very very ugly.

Saturday, 25 February 2017

Our trade policy needs a vision or Brexit is a lame duck

I am about as bored of writing about Brexit as you are of reading about it. There are many uncertainties and disputes over the facts but I think by now we can say that this government's approach categorically will not work. The only thing we can really do now is to wait for it to fall apart. This is not pessimism. Theresa May is simply not up to the job and is demanding the impossible while knowing only a fraction of what she needs to.

Whether the advice of Sir Ivan Rogers has been heeded we do not know. If not then we are in serious trouble. It is likely now that British exports, courtesy of the Tories are about to take a serious hit. Even if May achieves the bare minimum on free movement of goods we still stand to lose out.

Amidst the losses I can imagine a number of opportunities this might create. As a business software developer I don't expect to be short of work any time soon. More than anything Brexit is about reconfiguring systems. I think the economy will adapt over time and we will see some surprising side effects. It won't all be bad.

What sticks in the craw though is not that Brexit does all this damage. It is that these will be unforced errors that are entirely avoidable. Brexit will hurt far more than it ever needed to.

In a similar fashion our government is not up to mitigating the consequences. We are told that there are "bumper trade deals" to be had but the immediate task will be replicating all those agreements we have via the EU. Most of them will not be amended so we will not see any real advantage. This is actually less of a concern. Where we lose out will be the cooperation programmes between EU and global bodies. In some respects we won't know what we have lost until it is gone.

This means the government will have to work double time to reassert the UK in the global sphere. This though doesn't seem likely because those who have taken it upon themselves to look at trade have fallen into all the classic traps. Brexiteers have done nothing but talk about tariffs but then the remain inclined trade groupies on Twitter are not much further advanced.

The focus is centred on bilateral deals, following the government rather than leading with new ideas. Still nobody is looking at the bigger picture. We've heard the daft ideas like CANZUK but these are very much aspirational fluff which answer no urgent questions. What is lacking is any kind of original vision - without which, your trade policy can only ever be a meandering mess.

This is in part thanks to a lack of coherence among Brexiteers who have only ever offered up pipedreams as an alternative to EU membership. There has never been a unified vision among eurosceptics beyond the increasingly empty mantra of trading with the rest of the world.

To form a coherent trade policy we first have to ask what it is that we want. First off we want trade to make us better off, to provide jobs and create opportunities for business. We then have to ascertain what we do not want. We do not want free trade for its own sake if it threatens valued interests at home, nor do we want to lower our standards so that we import dangerous or poor quality goods.

In that you need a system and a strategy. Luckily for us there is already a system in the WTO, augmented by the agreement on technical barriers to trade and more recently the Trade Facilitation Agreement.

What should guide our strategy is the reasons for wanting to leave the EU. Clearly our collective efforts to stem immigration have been insufficient. The answer though is not expensive and bureaucratic border controls. It's a zero sum game. We are far more likely to get results by aggressively investing abroad if only to slow the flow of people.

This is where we have to look at the push factors for immigration, which in the case of Africa are failed EU trade policies, famine, corruption and poor governance. Development is absolutely key. In this the WTO Trade Facilitation Agreement (TFA), shamefully underreported by our media, is a game changer.
TFA has been welcomed by the Fair Economy Alliance, a group of organisations representing SMEs across Europe, which has been opposed to the “bilateral trade agenda” taken by the EU. The alliance opposes TTIP and the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU. Neither of these represent the voices of SMEs, it claims.
“This has been built up for almost two decades. It has been slow. But at the same time we have something that is substantial, that tackles the things that need to be tackled. Instead of something like CETA, which is very flimsy and not SME-friendly. It doesn’t solve any of the issues and deals with things that are very controversial,” Miguel Galdiz, research and advocacy officer for the Fair Economy Alliance, tells GTR.
He adds: “[For SMEs], the bilateral agenda is not the way forward. They want access to information, they want border procedures to be streamlined. They want all the things the TFA is meant to do. You want to be able to avoid this funnel vision of bilateral agreements, diverting trade towards specific partners. You want to open the multilateral doors.”
And this is what this blog has been saying for some time. CETA and TTIP are bed blocking enterprises designed to frustrate the foundation of a genuinely open trade system, effectively extending the single market walls around North America. In that regard, Trump has done the world a favour by killing TTIP. Though the President is no globalist, he has given the WTO a window of opportunity. 

To get the best from the TFA, though, we will need to invest. We can harmonise customs and reduce tariffs but there are hard facilitation measures we must consider. Take just one point from an entirely fascinating article:
"Africa’s port sector is grossly deficient in both quantity and quality of harbours, quays, cranage, storage systems and hinterland transport. How deficient? Although China and Africa have similar populations (respectively, 1.4 billion and 1.2 billion), in 2015 the five largest Chinese ports moved more than 118 million twenty-foot-equivalent units (teu), whereas Africa’s top five moved less than 10 million. According to Lloyd’s List, the entire continent accounts for just 3% of world container traffic".
This partly reflects the fact that much of the continent’s exports consist of primary commodities such as oil, gas, mineral ores and tropical agricultural produce that are moved on breakbulk cargo ships or tankers, but it also indicates just how little Africa participates in global trade.

Says the article "China’s demand for oil and minerals, as well as its superabundance of capital for external investment, had led to a surge in economic activity in the east and west of the continent, particularly Nigeria, the Great Lake states and the Ethiopian highlands. To see how pervasive the influence of China has been over the past 10 years, consider the growth in the number of African countries who have China as their primary economic partner". 

This is where we run into the curse of mineral wealth. Deals are struck directly with governments, making governments entirely dependent on foreign contracts, and though the money should go into sovereign wealth funds and infrastructure it very often disappears into Swiss bank accounts or funnelled into private wars. 

Our focus must be on container traffic because that's real goods in the real economy where everyday people can export. We get cheaper and more varied goods while money goes directly into African economies. To do that there are a number of investment strategies we must follow as outlined earlier.

Tackling things like city congestion, access to internet and port modernisation is absolutely essential. This is where we must direct our aid spending and it must be integrated with our longer term trade objectives. Development aid cannot be tacked on in the way DfiD is an accessory to our main trade department. They need to be one and the same. 

Aid has a very bad name in the UK at the moment. We have seen it squandered on do-gooder causes and we have seen some egregious waste. Public trust in aid has collapsed. We have to make the case that aid is an ambassadorial tool that can open doors for UK business. If Brexiteers want to match their own rhetoric about being outward looking proponents of free trade then we must make the case for proactive spending in the national interest. 

Presently Trade Facilitation is not taken seriously. It does not enjoy a high enough profile. Our politicians are locked into obsolete bilateralism and sad fantasies with echoes of empire. If we want to be true modernists and break away from the creaking protectionism of the EU then we must forget about bilateralism and seek out new global multilateral initiatives and put our money where our mouth is. 

Britain is a knowledge economy. We have the technology. We have the education. We have the resource. We must now decide how we are to put it to work. Development brings massive opportunities for British science and engineering and good governance is something we have a track record of exporting. We also know a thing or two about the maritime sector. 

There is no shortage of opportunities in Africa and every strategic advantage in focussing our efforts there. The Commonwealth might be dead but British prestige is still alive and kicking and though we take a hit from Brexit, we still have major assets. In some quarters of the globe Brexit enhances our prestige and many are glad to see us leave the EU. 

As ever my beef is not with the generic rhetoric of the Brexiteers. I do happen to think the EU is a creaking and corrupt mess unable to bring its might to bear in the face of a crisis, and I do think Brexit can be a turning point in trading with the rest of the world. The question of how we get there is where I have very serious differences. We cannot treat regulation as the bogeyman, nor can we turn back the clock looking for solutions. While we have been in our collective slumber the world has changed and trade has changed. 

In a lot of respects the nerds reciting trade technobabble on Twitter are just as obsolete as the die hard Brexiteers. They are following the model of the EU, seeking out exclusive comprehensive deals as a means to fend off free trade and to preserve the integrity of their insular racket. If instead we engage in the multilateral forums, seeking to get the best advantages from global standards and regulations then we enhance the global system while undermining the EU and its policy of sabotaging and controlling international cooperation.

To that end, anyone who wants to see Britain reclaim its voice internationally must speak up for trade facilitation and the removal of barriers. We must continue to make the case for well directed aid spending. We have committed ourselves to a target of 0.7% of GDP. This is an unpopular policy, but there is no reason why it should be. Some of it can be diverted to the Royal Navy to ensure we have the fleet logistics and security vessels to carry our work internationally and there is a stronger case for a hospital ship than a Royal Yacht. And why shouldn't it be built on the Clyde or the Tyne?

As much as anything, this kind of commitment can only enhance our soft power - which will be very necessary after Brexit. We need now more than ever to send firm signals that the UK is not retreating from the world and demonstrate that, in fact, EU membership is a real retreat from global participation. 

The problem with trade is that everyone is looking for big hits and headlines. Headlines though are only fleeting. Bilateral deals are only of limited use. Reductions on tariffs can even be completely useless. The gains to be made only come about through cooperation in small increments - but the Trade Facilitation Agreement gives us the framework to do exactly that. It's bigger than CETA and TTIP combined and when taken into consideration with the WTO agreement on technical barriers to trade we are seeing nothing less than the birth of a global single market. It's a bigger and better idea than the EU. 

More than like the Tories are going to make a pigs ear of Brexit. The eurosceptics never really had a vision and it would seem the Tories don't have one either. We have lost our knack for trade and we have learned the wrong lessons from the EU. If we want to put Britain back on the map then we have to sweep away the dinosaurs and dispense with the crapology of the London think tanks. It's time to put some real substance to "Global Britain". We need a complete rethink on trade and and we need to fly the flag for progressive measures to increase Africa's wealth. The dismal parochialism of bilateralism will not deliver for Britain.

There is plenty to do in a post-Brexit world

If we had a grown up media the ratification of the WTO Trade Facilitation Agreement would be major news. It's bigger than TTIP and CETA combined. Trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximise efficiency while safeguarding legitimate regulatory objectives.

To put that in plain English; we could allow any old garbage over the borders and that would boost trade. But we don't want to allow any old shit for a number of really good reasons. You don't want us importing baby formula laced with floor cleaner.

In order to prevent this from happening we have standards, systems to supply proof of conformity and inspection facilities. With that goes a shit load of paperwork and with a mishmash of different regulatory codes and forms, this red tape translates into prohibitive delays where very often there is little point in trying to export.

If, however, we agreed a global standard on paperwork and mechanisms for conformity assessment, all processed through electronic systems then goods cross borders faster.

One of the benefits of this is that if you have the correct paperwork then you reduce the number of inspections which reduces the opportunities for corrupt officials to pilfer items from your container. We can even have it so that even lowly customs officials don't have the authority to break the customs seal on a container if the scanner says the box is kosher. It also reduces the scope for bribery. One of the big problems for African trades is corruption. The WTO Trade Facilitation Agreement goes a long way to eliminating the worst of it.

We can though, for our own purposes, expand the definition of trade facilitation. Supposing you have a field in the back hills of Kenya and you grow something. You can't really export it because you know that if you load it onto a truck then that truck is sat in a queue at the port for eight days and by the time it gets loaded onto to a ship it's already spoiled.

That is assuming it doesn't spoil while waiting in traffic. Gridlock in African cities means a total systemic jam. Nothing moves for hours. You miss your container loading window. Something as simple as a traffic light system is a game changer.

There's one innovation that really helps here. Containers with their own on board refrigeration units. Known as "Reefers". These however, are quite expensive to buy and expensive to run. We need to boost the economies of scale. One measure we can take is to ban live animal export. It's better for animal welfare and we increase demand for reefers thus bringing down the cost.

But then if all the customs documentation is going electronic, what use is that if you are producing goods out in the sticks? This obviously means that access to the internet has to be improved so we then need to look at erecting mobile masts across Africa.

And then what if a business succeeds in exporting and needs to expand? That's where Africa needs better access to credit and micro-financing. This is where we need better governance and a more effective means of registering traders and a reliable means of credit risk scoring.

So you can already see there are any number of measures we can take by investing aid money wisely instead of squandering it on humanitarian causes. For sure, we all want to see nations pitching in when there is a natural disaster but when it comes to things like famine, more often than not you are looking at a failure of government - and governance. Unless we are prepared to make measured incursions to improve governance then all we will do is count the dead, time after time.

And then we get to my favourite subject. Dredging. At low tide you can't get a ship into a port unless you dredge the channels. If you do that you can load and unload ships all day rather than waiting on the tide. Just a simple operation can double trade volumes and cut costs.

This is why the Trade Facilitation Agreement, along with a complete rethink of aid and trade is so vital. It doesn't matter if by some miracle the WTO succeeded in bringing all tariffs down to zero. There are still physical and bureaucratic barriers to trade that hold Africa back.

We could relax our standards to bring Africa into the fold but I don't want to see that happen. I view it as the racism of low expectations. What we need to do is to spend our aid budget on technical assistance to ensure that lesser developed nations can meet the standards we impose and in the process improve their own governance and quality of life.

As much as eliminating congestion is good for the profit margins, it is better for air quality, extends life, and dramatically reduces road traffic deaths.

What we also note is that more developed countries with a growing middle class are more likely to have fewer children as infant mortality collapses. If you subscribe to the notion that overpopulation is a problem then trade facilitation and development aid is part of the solution - not moralising and birth control initiatives.

According to UNCTAD and OECD estimates, the implementation of the WTO Trade Facilitation Agreement costs between $4 to $20 million per country, while the impact on exports, and hence jobs, would be many times greater. The WTO estimates it could boost developing country exports by up to $730 billion per year - and global GDP by $1.3 trillion.

It may seem implausible and entirely hypothetical but technical and regulatory harmonisation is massively more beneficial than agreements on tariffs. Says what you like about the EU, the ability to move goods freely across borders without compromising health and safety and the rule of law is something we should celebrate and expanding it beyond the confines of Europe is something that is in all of our interests, especially if we want to mitigate the global migration crisis. There is also that general rule of thumb that when goods cross borders, soldiers do not.

In recent months globalisation has been blamed for much. The globalist politicians are despised. I can understand the latter but globalisation is happening whether we want it or not. For our generation, the question is how we obtain the maximum benefit from it while preserving our own democracies. The WTO, to my mind represents our best hope lest we be back to beggar-thy-neighbour trade policies, trade wars and conflict.

Automation and technological progress have changed the way we live and work and eliminated mass employment. The game has changed. We must resist the urge to blame globalisation. What matters is how we harness that progress in the common good.

The rejection of globalists is understandable. Sweeping decisions are made with neither consultation or consent. Various treaty mechanisms have eroded sovereignty and change is happening faster than we can understand it. We have a ruling class of unelected technocrats eliminating jobs at the stroke of a pen in the greater good without us having the means to say no. That is what made Brexit necessary. What we have in the WTO though is a system designed for genuine multilateralism where members can refuse measures of their own volition provided there is just cause.

I believe that is what the EU should have been, and the fact that it was designed to be anything but is why I gladly support Brexit and hope to live to see the day when the EU is made redundant and European nations can take their place in a global community of equals. Brits may reject globalism if forced into it, but they might well say yes if we actually ask them. Something our ruling class never thought to do.

This may well be a rose tinted evaluation, but I am not, as some believe, a cynic. I think this can work and we will be better off if it does. It is far more ambitious and inclusive than the EU and I want to see the UK championing it and steering it. I detest the dismal obsolete rhetoric of Brexiteers but I despise equally the narrow eurocentric myopia of europhiles.

They said in 1975 that we must join the common market so that we have a say in the rules. If that logic was sound in 1975 then it is sound now. We must leave the EU so we can be a participant in a global single market and seek a genuine multilateral system.

This won't be easy. We will need to build coalitions and forge allies and we won't be able to dictate the agenda. We must also be cautious of those who want to turn global governance into global government - and we most definitely need to ensure that the system is made transparent. We need to shine a light on it and take the time to understand it. It has flaws and is equally prone to corruption as the EU, but I see no moves toward a common flag, currency and social policy. If anything can work, it is this. If not, then we are back to square one.

Politics returning to normal

There were two by-elections this week. I didn't pass comment because they tell us absolutely nothing. They don't tip the balance and they tell us nothing about the next general election. They are both entirely administrative events. The real signals are in local elections where we see Ukip collapsing and Lib Dems taking seats from them. I take this as a sign that we are returning to the pre-Ukip norm which rather bins the notion that Brexit is somehow a resurgence of the right. It is simply a reversion to type.

The failure of Nuttall to win in Stoke is a great pity. Not because I wanted him to win but it would have been hilarious to see him win when Farage failed so many times. Howsoever, Ukip is now completely irrelevant. If they cannot win in Stoke then they simply cannot win anywhere.

As to writing off Labour for dead, what we can see is that the same old bovine tribal voting takes effect and as soon as it becomes apparent that the Tories are making a pigs ear of Brexit, we can expect tactical voting which could revive Labour's fortunes. Marginally. It will limp on as a zombie party for some time. The big story at the next general election will be a collapse in turnout. I won't be voting Tory so I simply won't bother.

I've seen dozens of declarations that "Labour is dead" but if you ask me, the whole system is on borrowed time and its decline has largely been masked by the spectre of Brexit. Now that's out of the way there are fewer reasons still to give consent to a failing system. There will be calls to form a new party, but ultimately the system is broken no matter who we elect. Sooner or later, that penny will drop.

Friday, 24 February 2017

It's time for remainers to get with the programme

If you look on the Twitter Brexit hashtag you will see that remainers are still fighting the referendum like the last six months never happened. I don't know why they bother. The EU is rubbish. They even said so. All the way through the referendum they said "Look, we know it isn't perfect and there is a lot wrong with it but that's why we need to stay in and reform it".

Course, one of the first thing a remainer would probably note is that the biggest obstacle to EU reform is the UK. Many suspect that the only reason the UK remained in the EU was to keep it off balance and that was as good a reason to be in it as any. What we saw was that UK based multinationals were able to steer EU law to their own advantage to make the single market the playground for our own oligarchy.

The short of it is that the EU was never going to reform while we were in it and the longer we are in the EU the more it is shaped in our own image - which is the complete opposite of the values remainers claim to uphold.

I listened to the House of Lords debate the other day and I listened especially to Jenny Jones of the Green Party. Jenny is a lovely lady with a heart of gold. Stone stupid, but you have to admire the sincerity in a sea of vipers. She was droning on about protecting workers rights as granted by the EU. This is where I get off the EU bus completely. It always gets my goat that those who waffle on most about EU workers rights are those the least likely to have ever held a real job.

One of the main reasons I work in the private sector is because it doesn't get in my way. The two best jobs in my career have been firms who have pretty much dragged me in off the street, had a quick chat and then set me to work. No stupid forms to fill in, no diversity questionnaire, no hassle. I have a zero hours contract right now and I love it since it is my ambition to work as close to zero hours as possible. So long as I can meet my expenses, it works for me.

The down side of this arrangement is that if they want rid of me then they need give me no notice, and can fire me for the most spurious of reasons. It's difficult to plan any kind of life because I walk a fine line between keeping up this blog and making a living. For me though I would much rather be sifting my way through a report on technical barriers to trade than writing code for accountants.

What works for me though is not the model that most people want. Most people that I meet in business have a far better handle on things than I do. They have plans and financial commitments and all the stuff that turns me cold. What they want over and above flexibility is certainty. They're not getting it though. They're on the same contract as me.

All we have done by gold plating rights is to make the classic model of employment redundant. The actual consequence is that nobody has any rights at all and we are back to square one. Through a number of EU interventions combined with those of New Labour we have demolished a system that sort of worked and replaced it with one that doesn't work at all.

Frankly, if the one thing Brexit produces is a Tory government that is finally allowed to take a wrecking ball to workers rights then I will be delighted. As it happens, I am more than capable of securing my own equitable deals with employers but over the years the EU has usurped the unions. There has been no real need for national unions to press for workers rights when the EU is already way ahead of them. What the EU cannot do though is adequately respond to the unintended consequences of their legislation.

I have worked in the engineering economy for more than a decade now and I have seen how the gig economy is taking hold. I honestly don't think it works. There is no loyalty to employees and that is returned in kind. We see pop-up companies set up to bid for specific contracts who have no institutional knowledge and are set up in such a way as to completely escape any responsibility for failure. The ultimate consequence is that large infrastructure projects funded by the taxpayer become corporate cash cows where there is an incentive for contracted employees not to complete work on time and on budget.

The result of this is a sort of corporatist socialism whereby the state is underpinning a vast estate of notionally private firms who basically wouldn't exist otherwise. We call it a vibrant private sector but it is anything but. We have simply privatised state procurement. Meanwhile, the big boys rig the market so only they can bid for and win the big contracts. All of this is underpinned by the UK's neoliberal approach to market liberalisation which in reality just means turning over public assets to corporate parasites.

What we have seen on the continent is a resistance to such moves with Spanish port workers going on strike, and the French are always eager to stand up for themselves. Meanwhile the British just adapt no matter how hard we get shafted.

More than anything I would like to see a factory reset on the system whereby we see a renewed union movement seeking to strike an equitable balance between the needs of business and the needs of people rather than the model imposed upon us by central economic planners. In this, I am more than happy to tolerate a Tory purge of workers rights if in the end it means a grassroots pushback to restore the pre-EU equilibrium.

I now think that Brexit most certainly will be bad for the economy. I expect to see a massive drop in exports to the EU (and a smaller drop in imports), with a huge increase in the balance of payment deficit. That will precipitate a crisis in the pound, reducing its value still further. Domestic prices go up, inflation soars. We are in for a torrid time. A decade of rebalancing and reinvention. But in that lies a great many opportunities to correct the gradual drift toward UK workers being commodities.

I am uncertain about a lot of things where Brexit is concerned but actually the certainty of the continued trends of EU membership are worse. We notionally have more rights but in practice they are worthless and you can only get justice if you can afford it. Law cannot guarantee rights. Effective unions can.

Ultimately if we can restore the equilibrium between employer and employee then we restore a degree of trust to the system instead of employers working to rule. The effect of which is a renewed social contract. EU advocates might note that this is a uniquely British dynamic and that the French and Germans do not have these problems and that you cannot blame the EU. Maybe that is true, but British culture is that we follow the law to the letter and that is why we are not compatible with the EU. We are going to pay a price for Brexit, and the benefits are debatable, but by leaving we have a great many opportunities.

Change brings uncertainty. Change brings opportunity. That is why I voted for it. Remaining in the EU would have been to perpetuate current trends. Though they may have underpinned a certain degree of stability, certainty and prosperity for the already prosperous, certainty is life limited. Eventually it becomes stagnation. That is the only destination for the EU. Brexit isn't a silver bullet. It doesn't solve very much, but it is a window for change. All we have to do is embrace it.

Brexit: how the Tories will spin their failure

It's a fairly recent thing but I've learned that when it comes to politics talk in the office, it's sometimes better just to shut up and listen. Sometimes it's good to know what people don't know.

What is clear is that those with any detailed knowledge about the process of Brexit are the extreme minority. My colleague today described his impressions of Theresa May which are not too far from where my own views were about the time she became PM.

Superficially there is a lot to like about the PM. She is the new centreground. One that is not hostile to business but one keen to clip its wings. My colleague spoke of the rip off contracts between the government and the rail sector and the unfairness of having awarded train contracts to German manufacturing.

This is where both extremes of UK politics fail to understand Mr Average. Mr Average is not hostile to business like the far left, but nor is he especially minded to tolerate banks and corporates taking the piss. There is room in conservatism for taking a tough line on business to ensure tax is fair and equitable but that does not extend as far as treating business as a magic money tree.

Mr Average is not especially jingoistic, doesn't mind free trade but at the same time does not want to see high value jobs exported. Mr Average is not a socialist, nor is he a neoliberal. Any party finding that centre ground is one that will win and hold on to power.

In that respect, Mrs May has won over middle Britain. Her bossy authoritarianism is actually quite popular so long as there is still room to make a decent living.

If I took no interest in politics whatsoever I would probably find myself in full agreement with my colleague. The problem I have is that I listen carefully to what they say and measure it against reality.

Mrs May is a lady of many masks. What she says to a Davos conference is not what she says to her own party conference. Being two faced is nothing new because the international message is always different from the domestic one but in this she is riding two policy horses. Her approach to Brexit is contradictory to her message abroad.

Mr Average thinks May has taken the right line on Brexit - leaving the EU and the single market. Mr Average thinks that there will be some sort of deal because German car makers will want a deal. You could spell out the potential pitfalls but you'll hear "that can't happen because...".

It's true that a great many European business interests would lose out should we fail to reach an agreement but that is no guarantee against a failed process. While Germany can put the pressure on EU Member States there's nothing they can do to stop May shooting herself in the foot.

The problem we have is that the EU, the single market especially, is an area governed by a set of rules. It lays down conditions for entry that apply to everyone. The UK is now seeking to become a third country. In so doing we move outside the city walls.

Due to the naivety of our government, they will then complain bitterly when the EU points out that there are certain conditions to be met in order to send goods back inside. The press will sell this as the EU being unreasonable whereas in fact the EU will only really be re-stating its own conditions of entry and that the UK has chosen to be outside the club.

In order for us to send goods into the EU we will have to meet their conditions and if we want favourable access then we will have to participate in EU systems and pay our keep. This is what Mr Average doesn't understand.

Mr Average thinks it's quite odd that we should have to pay a fee to trade with the EU when we don't pay to trade elsewhere. Mr Average has not given a nanosecond's thought to how much customs cooperation costs because Mr Average spends his day resetting Linda's password, calling out the boiler repair man, and running the payroll system. Unlike the Mr Norths of this world he is doing his job rather than reading EU regulations and writing blogs during the day.

This is the naivety the government hopes to tap into in presenting the EU as being unreasonable, making it look as though any restrictions placed on us are basically the consequence of trying to do honest business with Johnny Foreigner. Mr Average will probably buy it too.

In the end though, the real reason we will take a hit in trade is because the UK has chosen of its own volition to be outside the system and has declared that it does not wish to partake in the community of integrated European nations.

The government will quite skillfully spin this by jetting off round the world asking other third countries for a photocopy of the trade deals they have with the EU. They will then crow about all the "bumper deals" we're getting from outside the EU. Deals we already had access to. Far from reflecting how incompetent this Tory government is, it will reinforce with Mr Average that the Frogs are being awkward and that there really is more trade to be had outside the EU. Mr Average will find himself shafted by Mrs May and he'll still vote for her.

What we will then see is that the government is forced to take a number of contingency measures in order to paper over the cracks. New infrastructure will be needed to cope with the added port inspections and trade barriers. All this will be farmed out to private companies and the headlines will read "500 jobs created in Brexit boom to EXPAND our container ports". Never mind that the port expansion will be holding areas where armies of customs officials will be needlessly unloading trucks. Anyone who points out this reality will naturally be accused of being a "remoaner" unable to admit that Brexit has worked.

You really have to enjoy the genius of it all. Mrs May will kick Mr Average squarely in the balls and he'll thank her for it and blame the French for any loss of trade. Meanwhile the opposition sits there scratching their arses, oblivious that by the time they are next in power, they will be managing the mountains of public debt created by Brexit while having to prune local services on the quiet. Labour has to carry the can and then they get blamed for increasing public spending. Far from being a democratic revolution we'll be in the same old groove working to the same old narratives.

There is a lot we still don't know about how Brexit will pan out and I rather expect the benefits will be serendipitous externalities that nobody expected. We can expect to see a reshaping, if not a rebalancing of the economy, and it will modify the way we do things for a long time to come. Therein lies the opportunity which is why I still back Brexit, but you can bet your ass Mr Average will be none the wiser at the end of it. I suppose it comes back to the oldest of rules. If voting really changed anything, they wouldn't let us do it.

The best of intentions - but a bad design

By trade I am a systems developer. I design and build large data applications. A good system can be transformative in both efficiency and culture. A while back I developed a system for handling aircraft repairs to ensure they were completed on time and in order to eliminate paperwork. When you're dealing with safety and quality systems the paperwork soon mounts up.

As the system matured, providing us with a very useful warehouse of data, we began to make further efficiencies. Not long afterwards we saw the advantage in rolling the system out to suppliers who carried out similar work. We would often use another company to manage our peak load work. Due to various constraints we were forced to develop a slightly different system for suppliers but they were essentially the same.

Thankfully we were able to use existing network infrastructure to ensure the systems talked to each other. This worked well over a number of years. Eventually though, corporate governance got involved and identified the data link between the two systems as a security threat. Had we considerably upgraded our network technology we would have been permitted to continue but alas the costs were prohibitive. We were forced to sever the link.

Thankfully we were given some notice and so we were able to come up with a contingency system whereby the systems would communicate via email exchange, sending data in zipped attachments. It was far from perfect but since all the other options were closed down we were forced to make the best of a bad job.

The application itself was fairly comprehensive, being capable of producing airline certification documentation, but these features depended heavily on having a live link into the parent company. The system had been developed with certain assumptions in mind - one of which being that there would be a continual live link. As soon as this was severed, only the basic functionality worked and years of development were rendered useless.

In some areas of the business this caused a reversion to previous systems or simply adding more work for engineers who were forced to use Word templates and call in by phone for an official document number. It was a huge disappointment and a major step backwards.

The corporate view though was that the system was only reliable as long as I was in place to manage it. Throughout the question was asked "what happens if you get hit by a bus?". Being slightly accident prone I assured them that I have in fact already been hit by a bus, twice in fact, and a third time was statistically unlikely. This was insufficient reassurance.

If honest, I can see their point. Had they given the system more of an official standing it could have been supported but there was no budget for it. Worse still, it would have given me total leverage and I could, if so inclined, have bled them dry - as indeed do most software vendors. In terms of functionality my system was a net benefit but in the risk margins it was considered a liability.

In that regard, if that was their view they should never have allowed it to be developed in the first place. I'm sure they wouldn't had we told company headquarters we were building it. However, for the time it was running, while the going was good, we had a useful and reliable system that kept aircraft in the sky.

And this lesson is pertinent to Brexit. If you are going to build a system on which so much depends, seek the consent of those it affects, ensure you have a contingency plan and don't put all of your eggs in one basket.

As much as the EU was never built with proper consent, with much decided in secret, it is a system vulnerable to the whims of voters, whose reasoning can be often as spurious as that of any bureaucracy. They very often don't see the merit in what you are seeking to achieve while at the same time enjoying the benefits of it.

My mistake in developing an ever more intricate and capable system was the assumption the same consent would be a constant and that once the merits were there for all to see, consent would follow. Neither I nor the EU ever sought consent, overreached in what we are trying to do, and ultimately, without a buy-in from the people it affects, it could not last - however good it was.

I have since learned that the survivability of a system is its adaptability. One should keep it narrow in scope and limit the number of dependencies. Had the EU considered this we would not now be facing this mess. It was never developed with democracy in mind.

Thursday, 23 February 2017

Brexit: a political class asleep at the wheel

Iraq, MPs expenses, the Rochdale scandal, Leveson, welfare reform, Hillsborough and the Banking crisis is all standard fare for our media and the inhabitants of the Westminster ecosystem. I would not by any means call these matters trivial. This is what most people consider to be front line politics. But in terms of what is political, this is only the very tip of the iceberg.

What passes for political debate in the UK is largely shrill, shallow and prone to distraction by trivialities. Politics has become part of the entertainment sphere. What's interesting is how Brexit really does separate the wheat from the chaff.

What we find is that Brexit has opened up a massive can of worms where all manner of issues are suddenly up for debate again. Amazingly though, the debate has fallen silent. Very often I use the Brexit hashtag on Twitter to take the temperature of the debate. In most respects people have moved on. It is no longer interesting to them and that which is left is a sorry bunch of delusional remainers bleating away to themselves along with the usual die hard leavers publishing their risible wares. Nowhere do we see anything approaching a serious debate.

It seems that only the farming sector has a sense of urgency about it. Following confirmation that the UK would be leaving Euratom, we had a couple of days worth of protest from the nuclear industry and then the issue fell silent. Fishing could well be thrown into complete disarray yet the issue barely registers. Save for the occasional worthwhile contribution in the darker corners of The Guardian, there is little in the legacy media taking on the issues.

As much as the media is not interested, like our politicians, they simply wouldn't know where to start. Each are producing little more than partisan clickbait chasing ever shrinking audiences and somehow journalism has fallen through the cracks.

One gets a sense though that Brexit fever is only on ice. The public are thoroughly bored of Brexit already. Most of what we see in the public domain is largely a rehash of the referendum arguments. There is little to engage in. That which is going on in Westminster is of little value save for the odd sporadic side debate about the usefulness of the House of Lords. But again, such is a distraction. We are not seeing any kind of quality engagement.

In this we should not mistake the various recitals of technobabble as engagement. Much of the new terminology falling into media use is only half understood and is used as a figleaf to disguise their own lack of understanding.

It is for this reason I expect Brexit will be far more shambolic than anyone really anticipates. For sure the government hasn't got a clear idea of what to do but then who is to stop them, and who is providing any alternative ideas? Certainly not the think tanks. The left have nothing useful to offer since they have never taken an interest in the EU and they don't understand it - and the right have only dismal free trade mantras which take no account of developments beyond the confines of the EU.

It won't be until the shit hits the fan do we see any real space race in ideas. By then it will be far too late. The politico-media class will have failed utterly to make its mark on the debate and the people will be left to clear up the mess. Then we really will have a serious debate.

Collectively we are about to find out just how little we know about that which we have become entangled in. The invisible government that most of us take for granted will be back on the agenda. We will be back to those questions of who is running it and how. Perhaps then the purpose of Brexit will become more apparent.

As much as the politicians don't have a clue about Brexit, the people have only a slender comprehension of how deep the rabbit hole goes. Governance has become technical administration and we have gone into a collective slumber while putting it on autopilot. This very much is a kick in the complacency.

Just recently a theme among the remainers has been that we have been sovereign all along - yet at the same time they gleefully tell us that there will be much that we cannot "take back control" over. They can't have it both ways. Perhaps Brexit will be learning experience that proves us Brexiteers right. Too much was silently handed over without our knowledge or consent - putting all of our eggs in one basket.

For all that I have a dislike of Brexiteers for their refusal to admit that there are complexities, the remainers are possibly worse in that they acknowledge that there are complexities - but would rather not tackle them because life with the responsibility of participation is just too much hassle. In that regard the EU has become their comfort blanket.

If the price of freedom is eternal vigilance then it is high time these people were dragged back into politics whether they like it or not. If Brexit proves anything at all it is that for the last forty years our politicians and our media have been asleep at the wheel. Trainwreck Brexit is ultimately the price of their failure.

Wednesday, 22 February 2017

A free pass to a failing government

Returning to the report released today by the Institute of Directors, I have been asked to clarify why I think it littered with errors. First of all it is, to put it politely, blue sky thinking.

Brexit planning for businesses, says the report, is about building a roadmap. "They cannot plan on the basis of speculation and conjecture. The IoD welcomes the pursuit of a bespoke agreement, but for planning purposes this means more 'unknown unknowns'. Transitional arrangements therefore become more important". 

Erm. Ok. We don't want speculation and conjecture, but what else can a "bespoke agreement" produce, not least since we are faced with a white paper calculated to give as little detail as possible? The only thing the government has been clear on is that we are to leave the single market - encompassing thousands of regulations and policies - all of which now come into question. 

For a report that highlights the persistent demand of business for regulatory continuity, why would the IoD welcome a completely shambolic approach to Brexit, throwing the entire system into doubt? In fact, this whole report is speculation and conjecture. Amidst the motherhood and apple pie sentiments and the "no, shit Sherlock" we do not see any tangible solutions. 

I'm not going to go through the entire report for the benefit of the IoD, not least because I don't have the time, but let's pick a few points. The report has it that we must "Minimise customs checks by moving to set up a joint EU–UK customs committee as quickly as possible. The UK should join the Common Transit Convention, either through membership of the European Free Trade Association (Efta) or separate negotiations. The goal has to be to minimise the scope for crossborder consignment checks, particularly between Northern Ireland and the Irish Republic."

Fine. And what would that joint committee do? Minimal customs checks are done on the basis of risk assessment (which the report alludes to) which itself is heavily regulated by a number of EU and global instruments - administered by mature IT systems not designed to cope with increased volumes, many of which are locked into the single market acquis and require a high degree of regulatory conformity. Minimal customs checks are the beneficial outcome of masses of market surveillance systems involving many of the agencies that this government is committed to leaving. A joint committee doesn't even begin to cut it.

The report recommends that "Ensuring regulatory stability and predictability for businesses with respect to continuity of EU law through the Great Repeal Bill, with any changes in the short term to be gradual and kept to a minimum, removing the pressure of short-term EU-imposed deadlines."

Only had you never ever looked in any detail at EU regulations could you say this. Technical regulations, particularly in reference to trade in goods persistently refer to authorised bodies and EU agencies. They instruct Member States to provide market surveillance data and testing results along with any number of other requirements before we even touch the subject of standards and conformity.

To understand the relevance of the Great Repeal Bill, you have to understand the context in which it was suggested. It was popularised in Parliament as a concept by Owen Paterson (to much ridicule at the time). Paterson had come to this idea through Flexcit, which had, like him, advocated the EEA as an interim measure. It was since adopted in the same way that "point based immigration" was adopted by both Labour and the Tories. Our political bubble is very much an oral culture, where memes and factoids catch on. 

Thus, when it comes to the Great Repeal Bill, the Government is going to have great difficulty in separating out the functional aspects of the law and those dealing with the establishment of the EU systems, which are worked into the law. It will need to keep the one and remove the other. And that's not as easy as it looks. 

We've seen this with fishing, where the core regulation does not just regulate fishermen but also sets up the Common Fisheries Policy, empowering the European Commission to perform certain functions, and imposing the duty of co-operation on (multiple) Member States. 

Had the fisheries policy been written on the lines of Indian colonial legislation, it would have been framed by a "governor" based in London but appointed by Brussels, yet would have applied solely to UK waters. That we could have adopted, pro-temp, until we had something better. But Regulation 1380/2013, as it stands, is unusable without very substantial amendment. 

More recently, we've seen exactly the same type of problem with the Lift Directive. This is also dual-purpose regulation. Not only does it legislate for lift safety, it is one of the "New Legislative Framework" packages which sets up a Brussels-based system of control over a wide range of products. As such, once again, it empowers the Commission and places cooperative duties on Member States. 

We've been through many other examples, from chemical regulation to Air Traffic Management, and there are many more to come. But even now, it is evident that Government has vastly under-estimated the complexities of repatriation, and is not at all geared up to dealing with the problem.

A repeal bill does not really work without the EEA in that the EEA would still give legal effect to EU agencies and authorised bodies etc. It would mean considerably less re-engineering. Even a cursory glance at animal health rules would indicate just how nonsensical copying and pasting the rules would be without being in the EEA. 

This point is lost on the IoD (along with much else). The absence of EEA membership might well mean the concept of a repeal bill may well not work at all. You would think that the IoD would be very keen to point this out to the government. To bring any sense at all to it will be a massive undertaking and that work cannot begin until we know what mechanisms are in place for continued conformity and cooperation and when the take effect. 

This is where we get into the chicken and egg scenario as to how this dictates the timetable for negotiations. The government white paper has alluded to the fact that we will retain some unspecified participation in EU agencies and that is likely to influence the destination of any trade agreement. I could, like the author, take a punt at how this might play out but then we would be back to that "speculation and conjecture" - something the IoD, and business hopes to avoid. 

The point I would make is that you do not know what your transition looks like unless you know what the destination looks like - and that all depends on what the EU is willing to allow in terms of further participation. That then puts a huge question mark over the possibility of concurrent negotiations. Something the EU has already refused. 

Unlike most documents of its type, this report at least touches on many of the bases, but provides no real answers. The errors are less to do with the factoids therein as the conceptual problems. These are the same conceptual problems the government is likely to encounter by way of having decided to splice differing and incompatible mechanisms developed for different ends. We are only looking at surface level knowledge. 

The stock answer in these such reports is that magic "joint committee" which is an entirely meaningless, but superficially convincing notion. No thought has been put into whether the EU would wish to participate in any bespoke systems suggested given the administrative burden - and if we are to have our own bespoke means for maintaining conformity and dispute resolution then it is likely we who will pay for it. 

All this though seems to escape the author of this report which claims "One of the biggest trade-offs with a PTA ( preferential trade agreement) and any bespoke model is of course time needed to conclude the agreement, not least because of the unprecedented situation that Brexit entails. However, the fact that the starting point for the UK and the EU – in terms of tariff and non-tariff areas to cover – is uniformly the same and even harmonised in many areas should cut down on some of this. There is no real need for stocktaking exercises to identify where shared interests can be bridged, although the lack of clarity around article 50’s interpretation means a preliminary scoping exercise to set out parameters for negotiations is essential." 

No real need for stocktaking exercises? Really? This is pretty much in line with the view of David Davis as reported yesterday in The Guardian:
"Asked what the chief obstacles Britain faced in the coming negotiations were, Estonia’s chief Brexit negotiator, Matti Maasikas said: “Mr Davis maintained the line of the prime minister that they think that due to their regulatory convergence that the trade agreement can be negotiated in the two-year period. Everyone else is saying: ‘Do you really think that an agreement is negotiable in this time period?’ And the answer [from Davis] is: ‘We think it is feasible because we have regulatory convergence."
This is to totally misunderstand the process in its entirety. Brexit is the process of becoming a third country. Brexit is as much about rolling back a trade deal as it is entering a new one. It means asking and answering questions about established systems, some more than three decades old. In that time there have been considerable overlaps between EU and international rules. More to the point, there are no "preliminary scoping exercises". The EU and a number of Member States have been adamant that no such scoping will be undertaken - as Sir Ivan Rogers alluded to today.

Rogers told the Commons Brexit select committee that the EU was determined to keep trade talks separate from the article 50 divorce agreement, and suggested it could take until this summer “even to agree on what the negotiations should be about”. Worse still, so invested is the government in its simplistic notions of what is involved, from various reports we see than no real domestic effort is underway either. Something else all but the NFU have been deathly silent about. 

In its final recommendation, the report has it that "it is not enough for business to simply voice its opinion on what government needs to do to avoid the cliff edge of Brexit. Companies rarely wait for states to negotiate trade agreements before venturing into cross-border trade. Accordingly, business people must not wait for the outcome of negotiations before undertaking their own planning and consultation in an attempt to minimise the potential for disruption to existing commercial relationships". 

As it happens business has not even voiced its opinion on what government needs to do, nor indeed does this report bring any substance to it. It's all fluff. One would have thought that the purpose of a professional institution like the IoD would be to have a handle on these exact issues. It's a fine thing to say that businesses must not wait for the outcome, but with so many uncertainties in play there is little else they can do. That is why, one would have thought, that a body representing business would most certainly not welcome the government's wafer thin "bespoke" approach.   

One of the most incredible facets of the post-referendum debate has been a total unwillingness on the part of any of the trade bodies to push for answers. Recent efforts by the Road Haulage Association have been worthwhile but very late in the day. Speaking to a food exporter this week he reported that "I am a member of the FSB, and asked my representative about what they are doing about Brexit. He said "I don't do politics". And that really is the mentality we are facing. Mealy-mouthed and generic pleas to government to go easy on them (at best).

As I understand it, trade bodies in France and Germany are not pushovers in this regard. They exist almost purely for politics and demand to have their say. What hope is there when the IoD is welcoming the government's thin gruel Brexit "plan" leaden with heavy hints that they haven't the first idea what they are doing. That industry is letting them get away with it is a grave failure of politics - and that is where the real error in this report lies.

Brexit: more garbage for the pile

A report released today by the Institute of Directors is a prime example of how trade bodies fail their members. As much as the report is littered with errors, it is also uselessly adding to the noise.

In most respects it tells us nothing we did not already know. Business wants continuity of trade and regulatory certainty - and that the "walk away option" is unthinkable. Nothing new there. One would expect, though, that a body representing UK industry would have a lot more to say about which sectors are affected and how.

From recent form we have seen the government is not getting the information it needs, nor is there much point in asking business leaders since their knowledge of EU systems is about as slender as that of ministers. Trade bodies ought to be leading the field in pressing the attack yet we find them producing yet more derivative and generic content - which will simply be added to the pile and very rapidly be forgotten.

We can churn over the respective models until the cows come home and make generic recommendations (with no reference to what is actually happening) until we are blue in the face, but one might expect by this point - with only weeks to go before triggering Article 50, that there might be some sense of urgency in raising the alarm over the government's naivety and overall lack of preparation.

We are only just seeing glimmers of understanding in terms issues, but mainly centred around trade in goods and movements through ports - but even then only on a very superficial level. This is to say nothing of trade in services, intellectual property, maritime surveillance, air traffic, space policy, animal health, chemicals and the many lesser celebrated sectors.

With David Davis believing that existing regulatory convergence is sufficient to form the basis of any future agreement, believing the Great Repeal Bill to be sufficient, if the IOD were at all on top of its game, it would be screaming from the rooftops that this government, through its own ignorance is about to deliver a crippling blow to its members.

As much as regulatory harmonisation is only part of it, there is a massive question hanging over the the involvement in EU policies which are of considerable importance to UK business. We have heard only superficial reassurances from the government and in terms of farming, we have absolutely nothing to go on from Defra.

My worry though is that it is far too late. Industry should have been on top of this many months ago. Only now is the penny dropping that negotiations are no walk in the park. With so few interested in the technical minutia and with a government barely inclined to listen, it seems like wasted breath. Even select committees are not adding value to the process and various consultations have come up short in understanding. If this report is the best they can come up with then their members are wasting their money. The IOD is not pulling its weight.

Tuesday, 21 February 2017

Brexit: we are going to need a miracle

From the Guardian:
"Asked what the chief obstacles Britain faced in the coming negotiations were, Estonia’s chief Brexit negotiator, Matti Maasikas said: “Mr Davis maintained the line of the prime minister that they think that due to their regulatory convergence that the trade agreement can be negotiated in the two-year period. Everyone else is saying: ‘Do you really think that an agreement is negotiable in this time period?’ And the answer [from Davis] is: ‘We think it is feasible because we have regulatory convergence."
Except those are regulations which give legal effect to EU institutions (which we are pulling out of) and you need a mechanism to maintain convergence. You would have an outside chance of a basic agreement in two years (in a perfect world) if you adopted all the rules, institutions and agencies and recognised the ECJ - along with paying your dues - but when starting from a position of total ignorance there is no way this pathetic little man can succeed.

Because the government knows so little and expects so much, the process will very rapidly stall. There is nothing in the UK proposal which can be practically put into effect. Ironically, the only thing that can save us now is EU commission officials with whatever their counter proposal is. It will be met with blank stares by UK ministers who haven't even begun to understand how the system works.

If reports are correct then we are only a matter of weeks away from triggering Article 50. We are going into what are probably the most complex negotiations ever with a government which knows next to nothing. Unless the EU is feeling extremely generous in explaining the basics to our quarterwit Brexiteers then it is difficult to see how this does not end in failure. In this, ignorance is bad enough but when you add a large dose of Tory arrogance, it seems like crash and burn Brexit is inevitable.

Monday, 20 February 2017

Brexit: drifting toward failure

There comes a point where stupidity crosses the line into wickedness. The steadfast refusal on the Tory right to confront the realities of Brexit is one of the most astonishingly dishonest deeds I have seen in my lifetime. Through their respective propaganda vessels they have sought to promote the idea that Brexit can be quick and simple with no ramifications for trade and wider concerns. This is when it becomes pure malice.

The Guardian reports today that "The introduction of customs checks at Dover after Britain leaves the EU could bring gridlock to the south-east of England, with lorries queueing for up to 30 miles in Kent to get across the channel, senior figures in the transport industry have warned".

This has been an ongoing theme in the pioneering research of eureferendum.com - and those who follow the Brexit debate in any depth know full well where this information comes from. This is a reality the Tory right have gone to extraordinary lengths to hide from and deny outright. Such is their hubris and obstinacy.

There are those who have sought to engage however it would appear that understanding is still thin on the ground. Charlie Elphicke, the Conservative MP for Dover and Deal, believes the solution is electronic checks. He said he was consulting with local businesses and experts such as the former head of Border Force and consultants at Accenture to come up with a proposal in the spring.

What Elphicke and others are failing to see is that there are two sides to the Channel - the British side and the French side. You can clear customs of the UK side, but that only gets you out of the country. THEN, you have to go through French (EU) customs.

Clearance through the British side is usually a formality. There is only a very limited number of things that require export clearance (weapons, nuclear material, etc). For the most part clearance is a formality, required primarily so that traders can reclaim VAT and, for third countries, for statistical purposes.

This can be done electronically. It's not much of a problem for outgoing goods. The problem starts at two levels. First, when the goods are presented on the other side of the Channel. There has to be a declaration and then checks and well as veterinary checks.

The next hurdle is when goods come into the UK. There, they are coming from an external customs territory, because we're no longer in the Single Market/EU. The Declaration has to be checked, and we then have to decide what inspection levels.

Electronic clearance can only be achieved on the UK side. The French may (and probably will) require physical documents - and then there are physical load checks and then goods inspections. These are what are going to take the time. The Guardian article talks about space restriction at Dover but there are huge restrictions at Calais. The port is groaning at the seams and is undergoing upgrades. That project is not going to be complete until 2021. It's been years in the planning, and will need as much again.

The problem here is that we're dealing with the typical "little England" parochialism of the British press. They've focused only on the British systems and Dover. They haven't given a single thought to how the French customs system is going to cope (or not).

The problem will be that the trucks will be able to clear UK customs but, as the Calais system gets overloaded, the ferries and trains won't be able to unload, they'll start to back up, so the trucks in Dover and the Channel Tunnel won't be able to load up, and will start backing up, and then the queues start.

Seamless customs are a benefit of regulatory cooperation and is a consequence of having harmonised systems. It is the more visible aspect of a much larger single market system encompassing dozens of distinct agencies and volumes of EU and UK law. This is what Mrs May has chosen to disengage from.

Any proposal which does not acknowledge this reality is not worth the paper on which it is written. Given the lacklustre input of experts thus far, and the media trailing months behind on reporting these such issues there is only a slender chance that Accenture will produce anything of value.

Anything less than a comprehensive proposal taking into account the EU's approach to customs will more than likely be dead-batted as entirely unworkable by the EU. Not unfairly either. A system cannot be tacked on to single market law exclusively for the benefit of the UK without considerable compliance and participation in EU agencies.

By now it has become clear to all but the most brain-dead of Brexiteers that any future relationship with the EU will necessarily be comprehensive and restrictive. If not down to the nature of the EU then by way of legacy issues arising from having been a member of the EU. If the aim is to have seamless customs then Mrs May will need to reconsider her stance on being "half in, half out". We cannot expect special treatment.

It is astonishing that the media is not shouting from the rooftops that this government is singularly ill-advised in their conviction that their woefully simplistic model of Brexit can be delivered in just two years.

On present form we are running out of ways to say, and to demonstrate, just how far out of her depth Mrs May and her government is. They are setting the country up for a massive humiliation while putting the livelihoods of millions at risk. Unless the opposition gets its act together we will pay a far higher price for Brexit than we ever needed to. We are sleepwalking toward the greatest political failure of the last fifty years and all we hear is incomprehension and silence.

Brexit: painful but necessary

From the beginning I have been keen to downplay the economic benefits of Brexit. Increasingly though it looks like they are few - for the time being. It will take time to establish a new order to things and the transition will be expensive. There are days when I really do wonder if it is worth the bother. But then I remind myself that this isn't about economics. This is about power and the direction of travel.

It should not be forgotten that Brexit is about ending political union. The salami slicing of powers and the centralisation of authority is what makes Brexit necessary.

One of the reasons Brexit is so difficult to achieve from a legal and technical perspective is that power has been surrendered inside legal mechanisms designed to be permanent. Many EU laws give effect to centralised authorities which ultimately results in the phasing out of national institutions and authorities. In effect we have been sleepwalking into a federal Europe for more than forty years.

The natural destination for this is calls for more democratic legitimacy to which the response will be a directly elected presidency. But this is is where most people get it so wrong. The installation of voting rituals and elected offices should not be confused with democracy. Just look at the USA. Fifty two states dictated to by a corrupt Washington establishment, plunging the country into ever more debt, refusing to ever change direction. Democracy it is not.

And just because the EU clothes itself in the garb of liberal progressivism does not make it any less prone to imperialism or indeed military adventures. Libya and Ukraine are very much EU policy failures. Then when you scratch the surface of EU trade policy in Africa we find that it is every bit as destructive as that of the USA.

For decades now we have seen Washington pursuing pretty much the same failed foreign and economic policies, becoming ever more remote, ever more expensive and unable to resolve many of the corrosive policies that have undermined the USA as a first world nation. US education is utterly bankrupt and their prohibition policies have destroyed US cities while exponentially increasing the prison population.

Too much power is vested in the centre leading to destructive turf wars between central government agencies which are ever more cash hungry, wasteful and corrupt. Everybody knows the war on drugs has failed, everybody knows it is the reason Central America is still a corrupt basketcase and despite the mountains of evidence the people of the USA still cannot force the hand of their government to change policy. The lasting resentment ultimately ends up with scumbags like Donald Trump.

And for all that I despise Donald Trump, he will at least break a few things so that there can at least be some renewal - much like a forest fire. The effect though will only be temporary as the power still resides in Washington.

For whatever good the USA has served, the current model is over. America is broken, the system doesn't work and American power has jumped the shark. It is reckless, blundering and incapable of change. So why do we want that for Europe?

I now take the view that America can only really prosper once more if it breaks away from Washington rule and restores the powers of the States. The whole federal system needs a wrecking ball taking to it. Beyond the mechanisms that uphold rights enshrined by the constitution the central US government needs to be pruned to the bare bones.

In a world that is gradually becoming a global community of powers, we must have systems and rules but we cannot put the power in the hands of the few. It doesn't matter if those few are well intentioned. Incompetence and hubris is as destructive as malice and power does not always stay in the hands of the well intentioned.

We should never lose sight of the fact that, for all the economic perks of the EU, it was intended from the beginning that it would be a supreme government for Europe. In that it should be noted that the bigger a state the more remote it is and the less responsive it is. Ultimately it becomes a corrupt behemoth that sucks the vitality from public life - and in its own way powerless to reform itself.

I want to see a Europe of peaceful cooperation among nations. Central diktats are not cooperation and for all the voting rituals and pieces of democratic furniture like the EU parliament, it is not, and never will be, a democracy.

Those administrations who signed away powers to the EU did so in the belief that they could prevent war in Europe. Except that a government which cannot and will not change makes war all the more likely. It won't be a war of armies, just a low grade state of permanent civil unrest and decline. We can see it happening in the USA. New York City maybe the gleaming jewel but everywhere else you see systemic decay, poverty and an increasingly stagnating economy.

Europe is already struggling. There are internal stresses and strains made worse by the global migration crisis. We have seen only sticking plasters and gestures from the EU - which is crippled by bureaucratic inertia. We need an urgent response to a global economic slowdown and yet what do we see? Prevarication, delay and the same old thinking.

Many people I know voted to leave the EU in fear that it would collapse. My fear is that it won't. Power is never given up easily and the EU won't go without being shoved. It will linger for a century, confiscating more power as it goes, depriving nation states of the means and authority to tackle their own problems as they see fit.

We are told that Brexit means a decade of uncertainty. That much is true, but we should never lose sight of the fact that mainland Europe is in serious trouble and has been for the last decade. Paris has never been more dangerous in my lifetime, German cities are rotting and the Eastern Europe is socially regressing. The EU offers no solutions and all the while it pours yet more petrol on the bonfire.

Britain has a rosy view of the EU, or at least the remainers do. They see the EU through the distorted prism of prosperity. The reason the UK prospered while being a member of the EU is because we have made structural economic reforms and taken our environment seriously. It is we who did that, not the EU. The EU could affect the same changes elsewhere but it won't in fear of a populist revolt - because mainland Europe is economically and culturally different.

The result is a state of limbo where le grand project sits there in an incomplete state, unable to secure a mandate to go further and struggling to hold the mandate it has - which was never freely granted to begin with.

It is sometimes difficult to see the woods for the trees. All this talk of the mechanics of leaving can make us forget why we do this. There are few direct economic benefits to leaving. At best we can afford ourselves a few more tools, but how well that pans out depends on how we use them. There are no guarantees. But we did not do this for cheaper goods. Here there was a principle at stake which transcends the economic.

Leaving the EU does not bring about that democracy we strive for. It is only a stepping stone and a safeguard to ensure things can get no worse. We still have a long road to travel and there is much we need to do to reform our domestic politics. We could have rearranged the institutions while being a member of the EU but if those institutions are subordinate to the EU and not the people then there is no point.

We should be under no illusions that there are sunlit uplands to Brexit. We will pay a high price for having entered into irreversible agreements - but we do this to ensure that the power stays within our reach and ultimately remains accountable to us. These are principles for which men have laid down their lives. We would do so again. I am not, therefore, all too concerned if it means paying a bit more for groceries. A peaceful exit from a failed project may have its costs but I like the alternatives a whole lot less.