Monday, 1 May 2017

Soft Brexit is not that soft

You better get used to me saying this every week because I am going to keep saying it until it sinks in. Britain is not negotiating a free trade agreement yet. First comes the administrative chore of agreeing the basic framework for exit. We already know that it is broken into three constituent parts. The divorce, the transition and the trade agreement.

The first issue is that of the financial settlement. The UK as a member pays for the upkeep of a number of regulatory bodies and market surveillance systems. Each of these is its own corporate entity which has overheads, contracts and commitments and the UK has a share of those liabilities. Upholding those contracts is a matter of international law and it is also good politics. Furthermore, we do not as yet know what from the transition will take but we can assume it will take years and in that time we definitely will be making use of those agencies.

Then there are the relocation costs and costs incurred by way of the UK leaving. The EMA has relocation costs which have not been budgeted for. The EU not unreasonably thinks we should pay the bill. You might argue that the burden should be shared but this really is bicycle shed syndrome. A few hundred million or even a couple of billion added to what will be annual payments for the next decade is not really a substantive issue. Not least when we would be paying the normal contributions anyway.

These such admin issues are the very last things we need to be having pointless arguments about. What is of more concern is what form the transition will take. That is complex in that we don't know what we are transitioning to. That means there most likely will need to be a memorandum of understanding outlining the broad requirements of a future relationship. Note that I call it a future relationship and not a "trade deal".

I say this because the UK will be, if it wants to keep its pharmaceuticals industry (and let's assume we do), in some way a part of the EMA. The same will apply to the chemical registration system etc. Then there is everything from the Single European Sky to market surveillance systems, maritime governance, agriculture and fish. Even if we are taking back the ownership of UK waters, foreign boats will have acquired rights and quotas. We will either have to respect those legacy rights or buy them out. That may come as part of the divorce proceedings.

As the EU represents about half of our trade and many of the systems are necessary for the functioning of trade we will need to decide what we intend to participate in, how much we are going to pay for it, and what judicial mechanism we have for the purposes of the transition and finally any dispute resolution system in the final deal.

All of these questions have yet to be resolved and we have a government that has yet to even recognise many of these things are even an issue. More than likely the EU does not want separate judicial entity and wherever possible it will insist on the ECJ. Instead, where applicable it may well be the International Arbitration Court but that will likely use ECJ precedents as it has no case law of its own that is comparable.

The fact is that modern trade deals are not trade deals. They are not agreements that are set in stone. They are in effect legal systems to govern trade between the signatory parties, granting certain rights and lending authority to certain bodies. As much as the average trade deal is considerably complex, this agreement will form the basis of an entire relationship going well beyond trade in goods. It extends into intellectual property, bio-security, counter-terrorism and financial regulation. All of this has to be negotiated, run past lawyers to ensure its conformity to international law and at every turn it will need to be translated into 26 other languages and circulated for comment among the member states.

That means none of this is going to happen quickly and there are plenty of areas where reaching agreement is going to be next to impossible. Further still, as much as there is the QMV on the final settlement, there is also the secession treaty that requires unanimous ratification. The chances of this going well are next to nil. This is why I advocate a soft Brexit because it uses instruments already in existence and not up for negotiation in order to at least get some of what we want and remove the risk of any transitional solution (with the ECJ as the judicial system) becoming permanent. I take the view that it is better to get out faster with the minimal amount of economic harm rather than holding out for something which is likely impossible and will not deliver on Brexiteer expectations.

There are those who still maintain that soft Brexit is not Brexit. These are people with a woefully inadequate understanding of the depth and complexity of the issues and more than likely people who don't want to know either. These such people are those who believe that Brexit delivers absolute sovereignty and free licence to do as we please once we are out.

There is no reasoning with these people. They will more than likely deliver an economic calamity which shuts down all of our trade or lead Brexit into a dead end where we get most of the hassle of membership but none of the benefits of leaving. Anyone at this point pretending there are simple solutions is someone attempting to deceive you. The usual culprits. Anti-knowledge rags like Conservative Home and Spiked Online. Treat them with the contempt they deserve.

My final point of the holiday weekend is this. Bombastic twits can bleat all they like about soft Brexit not being Brexit but it should be noted that soft Brexit (ie retaining the single market) is not actually that soft.

First of all the EEA agreement makes zero provision for fishing and agriculture. That will have to be a wholly separate negotiation. In all likelihood we will agree a framework to maintain CAP and CFP until such a time as we know what we are going to replace it with. We are rapidly going to find that whatever DEFRA has cooked up is completely unworkable. That won't be run of the mill Brexit incompetence. It's just that managing fisheries is an intensely intricate business which absolutely depends on good regulation. We are not even close to a workable policy yet.

As to the rest, as part of any transitional arrangement we are committed to porting the entire EU body of law on to the UK statute book. That allows for normal functioning of trade provided the necessary mutual instruments are in place for recognition of qualifications and conformity assessment. Where this method falls over is that EU law grants authority to EU bodies which immediately crates problems. We are first tasked with editing that law to bring into effect our own bodies - most of which no longer exist. You need at least three years to set up rudimentary government departments and three years more before they are ready to roll. Even with the most competent civil service ever the transition is going to be a stone cold mess.

The purposes of staying n the single market is to make use of the EEA agreement whereby we use the annexe system to substitute authorities named in UK law with UK authorities as and when they come on stream.

As it stands, even if we continue with a number of EU market regulation mechanisms there is still going to be a huge amount of confusion as to what is changing, when and how. The question for the hard Brexit turnips is whether or not they want to see just about every sector descend into a red tape oblivion as they struggle to comprehend what the hell is going on. Do you want a degree of continuity or not?

The meme among hard brexiters is that mere equivalence is enough to ensure continuity. Obviously it isn't that simple. Enforcement has to be an entirely new regime and one inspected by and approved by the EU if we want to ensure trade is resumed without any fuss.

The point of soft Brexit is to make it so that by the time we pull the lever on systems to switch them from EU to UK control, they remain broadly the same but (within the terms of any future treaty) capable of being reformed and updated. This allows us the opportunity to take our time over reforming various sectors while leaving alone those that work without much further tinkering. Doing it any other way means landing yourself with it all at once with all the disruption and expense that goes with it.

As to the properties of soft Brexit, it doesn't give you regulatory independence but we were never going to get that under any circumstances. More to the point, the regulations that exist are adopted by the EU from global bodies who in turn adopted them from business standards. When we look at the technologies and methods presently streamlining customs we find that much of it is private sector led and light years ahead of regulation.

They feed into the system how they want it done so that they can say it is regulated - but also so it matches how they want to do business anyway. The Tory deregulation meme is one of those perennial hobby horses that largely come from policy wonks who have never worked in a business let alone managed one. It's a policy meme passed down through the generations like family silver. It's the same wank their parents used to bang on about.

The short of it is, soft Brexit is a misnomer of a term in that the single market is far less than half of the EU acquis. Something close to about thirty per cent. Since you would end up adapting much of it under the aegis of an FTA anyway why go to all the trouble and why lose trade when you don't have to?

In the past few days we have seen a number of preening hacks saying that those advocating soft Brexit should be honest about what they mean. Well, it means not fucking ourselves over for no reason. The flip side of that is that hard Brexiters need to come clean. Is this nihilist crusade to throw the entire system into chaos part of a glorious revolution? If it is, you need to say so. I think you'll find that it ain't that glorious and what you're angling for is not what anybody sane voted for.

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