Friday, 3 February 2017

A masterclass in self-delusion

The Brexit white paper starts off from the misapprehension that regulation functions separately from the EU agencies. It doesn't. We are talking about a system of governance. I will say this until I am blue in the face.

The problem for us is that we don't have the capacity to replace the functionality of those EU agencies, and even if we could it would not give us market access on the same basis. Far from it in fact. The axe will have to fall somewhere eventually. That's where the politics will derail it.

If we are going to negotiate interim membership of EU agencies then it follows that most, if not all regulation will have to be followed and for the duration the EU will insist on ECJ supremacy. There is no way it can work otherwise.

Chances are that interim arrangement will bleed over for a long time. You can only specify a termination date to transitional measures if you know what you are transitioning to and no work has been done in this regard because the government doesn't have a handle on what is involved. 

There will need to be a system and the EU is going to insist on maintaining budget payments throughout - and legally, we will remain under ECJ jurisdiction. Unless there is an agreement to use the EEA secretariat and shadow the EEA then there is no other framework for what is proposed.

We will probably end up formalising interim measures as an association agreement in the future because whoever is in government by then won't dare give up the market access (unless the EU insists otherwise). As M Hollande puts it “Europe isn’t a cash-box, not a self-service restaurant, a Europe where you come and take what you need, where you take your structural funds or get access to the internal market and then show no solidarity at all in return”.

There is no possibility of the Tories pulling this off because they have not understood how the system works or even that it is a system. They want a flat agreement under the assumption that it can stay as it is for the rest of time rather than evolving as the EU changes.

Modern free trade agreements create joint institutions and working groups for continually evolving relations, formalising cooperation on market surveillance, customs, biosecurity, food safety, trade complaints and dispute resolution. Negotiations are about establishing the institutional architecture. We already have that yet now we propose to pull out of it and replace it with nothing.

Without that the system doesn't work. You don't even have a system. We could have our repeal bill transposing EU law into UK law but what happens when the EU has an overhaul? How are imbalances addressed? 

From the government this really is "cake and eat it" stuff and they are in for a rude awakening. The question then is whether there is time to salvage it - and what the price will be. The EU is in no hurry to set up a new framework for the sole benefit of the UK. There is no practicality in it and no reason why they should. It's either Efta or the ECJ - and since David Davis has ruled out Efta, draw your own conclusions. 

What it looks like to me is that the government has painted itself into a corner, keeping us in the EU for longer while we work out the details. This will either lead to an association agreement, where we are gradually sucked back in or accidental Brexit where we crash out with no deal at all. Neither is especially appealing. This is why the EEA would have been the best way forward. It might not be ideal but at least we would be all the way out of the EU and we would keep our preferential trade status.

I'm not making any bets on how it will pan out but we can be assured that the Tories, in their arrogance and naivety will make this more costly than it needs to be for a less favourable outcome. Irony being what it is, the Tory insistence on getting us all out in one go might well be what keeps us stuck in EU limbo. 

The process of leaving is vastly more complex than the Tories believe it is, and the administrative leverage is all in the hands of the EU. We are headed into talks with a woefully inadequate plan and a grossly inflated sense of superiority. Even if the government were correct in its bogus assumptions, the EU is, if nothing else, a rules based institution. It will not break its own rules to accommodate the UK. It has never done this in its relations with anyone holding a comprehensive agreement with it. At best there have been conditional opt outs where there is always a penalty.

The Guardian view is, for once, bang on the money. "The government peddles the fantasy of a tax haven, regulation-lite British lion prowling global markets. It’s a delusion encouraged by ministers who suggest Europe is secretly terrified of dealing with such a beast". That delusion will cost us dearly.

No comments:

Post a Comment