Thursday, 23 March 2017

Brexiteers are still missing the point

Writing for City AM, Hjörtur Guðmundsson mounts a blistering attack on the EEA option. "Coming from a country with a long experience of the EEA while outside the EU, I simply cannot recommend that path to Britain, either as a temporary transitional arrangement, as some have suggested, or as a permanent one".

Speaking as an advocate of the EEA option, I'm afraid that Mr Guðmundsson has rather missed the point. And it's point that seemly escapes Civitas as well. Were we starting out from scratch I wouldn't recommend the EEA either. I would object to it for more or less the same reasons I object to the EU. But we are not starting from scratch. We have been a member for four decades.

Mr Guðmundsson has it that:
"The EEA Agreement means the EFTA/EEA countries are subject to most of the EU legislation covering the bloc’s internal market and therefore indirectly the EU integration process in that area. This was recently highlighted by a representative from Norway. Like EU membership, the EEA Agreement demands transfer of national sovereignty to supranational institutions. While the institutions in question are run by EFTA and not the EU, they are expected to mirror the decisions made by the European Court of Justice and the European Commission.

The latest EU demand is that the EFTA/EEA countries must become subject to its newly-formed financial authority. The EFTA/EEA countries have already accepted this after it was agreed that EFTA will ensure compliance within their borders. However, Iceland’s most senior legal experts in this field have concluded that EFTA will in fact only be a middleman to make it appear as if the EFTA/EEA countries are not accepting EU authority".
Now this all depends on who you talk to. Some have it that it is an amicable system of co-determination. Others have it that Efta states pretty much roll over and do as they are told. I think, depending on context, the truth lies somewhere in between. That is why I would not wish to join it were we not already in the single market.

The point I would make is that if we wish to maintain frictionless trade then we will necessarily have to adopt EU regulations, and in fact the Great Repeal Bill promises to do exactly that.

There are several issues to consider here. Firstly we have to integrate EU law on to our own statute book which is not so easily achieved outside of the EEA in that EU rules bring into effect a number of protocols, institutions and regimes for which we have no immediate replacement. Across every policy area we are looking at partial or complete re-writes on the fly. It is not so easily done.

The second point being that simply aligning our laws with the EU is not enough. We need a mechanism to maintain conformity and equivalence. Already there is a major programme of food safety reform along with intellectual property and data protection. If we do not have a system of co-determination then we will simply be a passive recipient of rules. More than likely that without the Efta court we are more likely to have to abide by ECJ rulings.

The only other way to avoid this is for any new comprehensive trade agreement to have some sort of court or arbitration system. We need a system for continued relations with the EU. Whether we like it or not the EU has its own gravitational pull and as our nearest neighbour, and the closest of the three regulatory superpowers in the world, it follows that we will be bound to follow the EUs rules in one form or another. If you try to ride two horses you find that one supply chain comes at the expense of the other.

The misapprehension of Brexiteers is that free of the EU we can throw the rule book away and form our own standards in a vacuum where it has no ramifications for trade. They further assume that we will have no further cooperation with the EU medicines agency or other such agencies. If we want to export chemicals and pharmaceuticals then it is more than likely that we will retain some of the functionality, if not associate membership of them. There is no clean slate.

Having ruled out the EEA we are now in a position where our participation in such programmes will be as the junior partner with considerably less say than EEA members. We will also need a far longer transitional arrangement specifically because we will need to develop domestic administrative capability and re-write nearly all of the rules in order to remove EU bodies. We will linger on as a shadow EU member for some time rather than being out.

More to the point, Brexiteers have a woefully limited understanding of the depth and complexity of the trade agreement we will need. There is no magic wand solution nor is there making the inherently complex simpler. If we were talking about trade in goods then yes things might very well be straightforward but we are also talking about everything from chemicals registration to air traffic and space policy.

Had we opted for the EEA we would be taking most of the risk out of negotiations and the process would be subject to far less uncertainty and risk - and there would be fewer points of failure. What we shouldn't forget also is that a trade deal cannot be done in two years. The EEA solves that. Trade is for the most part already dealt with.

There seems to be a universal failure among Brexiteers to understand that we are not starting from scratch. We must undergo a slow and forensic process. Nothing is going to happen quickly and the more radical the approach the more damage we will do. It is entirely unnecessary.

You will get no argument from me that Britain needs to leave the EU in order to enhance its trade globally but the aim should be to enhance and augment the trade we already have. The EEA at the very least safeguards the majority of our EU trade and that which we do via the agreements the EU has with third countries - another factor which seems to escape Brexiteers.

Nobody that I know of has made the case that the EEA is ideal, rather that it solves a number of headaches regarding the exit process and reduces the risk of a trainwreck Brexit, which should be the number one priority for this government. The Efta system is far from perfect and the single market has many serious flaws. I have no arguments with Brexiteers about that. Whether we like it or not though, the WTO option is a total non-starter and there isn't much to be said for the FTA approach either. It does not give us the free hand in regulation that Brexiteers want - especially when you examine trends in global regulation.

I think though, this renewed effort to attack the single market from sources on the hard right is a good sign. They wouldn't be so vocal were they not worried about something. We heard yesterday from the EU’s chief Brexit negotiator, Michel Barnier, that “A no deal scenario is not what we want” saying that failure to reach a deal would have "serious repercussions for the UK". It seems that there is a least one grown up at the table even if he's on the opposite side of it.

I rather suspect this has the hard Brexit zombies worried. Outside the Brexit bubble nobody thinks a no deal situation (their favoured outcome) is viable. It might well be that the penny has dropped in high places and this is their swansong. We can only hope that it is. We are leaving it a bit late for sense to prevail.

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