Wednesday, 5 July 2017

Life can be good outside the EU

It's not often you come across a fair minded evaluation of the Norway option. This post by Nick Sitter and Ulf Sverdrup is one of the better efforts I have seen. Read it. It points to how the EEA agreement is more of a system than a trade deal and is configurable. As a basis for a new relationship with the EU, it's a no-brainer.

The authors have it that the EEA deal allowed Norway to maintain formal sovereignty while delegating actual sovereignty. I think that is perhaps a clumsy assessment in that they outline the many mechanisms by which the institutions of the agreement serve as a firewall where the adoption of rules is a matter of process and negotiation. But they are broadly correct in that the emphasis on formal sovereignty is there - which is exactly what we want from Brexit - the end of political union, while maintaining a framework for ongoing cooperation.

What is refreshing about their assessment is that it recognises the limitations of the arrangement without making a fuss about it. They argue that there is a need for a non-EU state to establish clear priorities and to pick its fights intelligently. "A non-member can have an impact in a policy area if it prioritizes, and explains its domestic constraints. But going for the ‘select all’ option on the conflict menu is not wise. Norway has managed to keep fisheries, agriculture as well as oil and gas out of the EEA. The UK government is well advised to decide – and to signal clearly and openly – what its real red lines are".

This brings us back to the issue of freedom of movement. In most respects we can accept the EEA acquis without much confrontation but Brexit, politically, requires that we address the issue of immigration. This is where we can use the instruments within the agreement. We can very easily present a case for limitations on freedom of movement.

There is an assumption that our reasoning must be watertight and withstand intense scrutiny. But this is politics we are dealing with and one of those "domestic constraints" is a popular requirement to have more control on who we let in and under what circumstances. There is every reason to believe a compromise is possible, not least since the alternative is a far longer resource intensive exit process, which is good for neither party.   

I would go into more detail but we have touched on these issues elsewhere to a greater extent. What piques my interest here is the final lesson offered.
The final lesson concerns life outside the EU. Non-members are in effect relegated to the role of a lobbyist – albeit sometimes very important lobbyists. This is a new role, in which expertise, policy competence and the wisdom to gather information, advocate solutions, and intervene at the right time counts for more than formal power. As a lobbyist on the outside, the UK will compete with many governments, organizations and firms. Norway’s experience shows that outsiders can have influence on the EU system, particularly in policy sectors where it is a ‘super power’ – such as oil and gas, but most often such influence depends on successfully aligning with the interests of key member states, and arguing in line with what is best for Europe and the EU, not on the need for special exceptions.
This is absolutely critical to the whole Brexit argument. We are repeatedly told that Norway has no say in the rules. A tiresome canard we are so very tired of debunking. The Norway experience shows that when they pick their battles well, enlisting support from other non-EU members it is able to obtain substantial concessions and pressure the EU to revise its policy even internally.

To say that the UK would be a "lobbyist" is a fair assessment but I would go one further and say that the UK would be an active and powerful one. Assuming we can successfully conclude Brexit with an EEA agreement, or something of its type, then the UK does not become a down-and-out charity case. It has a means of coordinating a high level of cooperation while being a free agent on all of the many global forums capable of acting in the direct national interest without subordination to Brussels. We would still enjoy more economic clout than most EU members, and we should not forget that even as a member of the EU we are a lobbyist and we don't call the shots.

A key thing to note however, is that the authors state that as a lobbyist "the UK will compete with many governments, organizations and firms". The latter is a seriously important observation because it gives us an insight into the bigger games in play. The nexus of power in world and regulatory affairs is a multifaceted, multi-forum exchange where coalitions of big business, unions, NGOs and nation states broker agreements, regulations and standards. The EU is far from being the "top table".

Ditching the parochialism of EU politics, we must turn to the more interesting news from last year, regarding the formation of a new international public-private sector coalition, the Global Alliance for Trade, an alliance designed to streamline border management in developing countries associated with implementation of the new WTO Trade Facilitation Agreement (TFA).

The new alliance was announced at the 10th WTO Ministerial Conference in Nairobi, Kenya and consists of governments, international companies such as Maersk Group, DHL and Wal-Mart, and the International Chamber of Commerce and the World Economic Forum. The objective of the Global Alliance for Trade is to accelerate trade facilitation reforms by supporting swift and wide implementation of the WTO Trade Facilitation Agreement (TFA).

Today, customs processes can involve large amounts of documentation that typically are not digitalised. This and lack of coordination between private and government actors adds unnecessary waiting time and delays to traded goods, resulting in added inventory costs and the risks of penalties for importers and exporters. Reforms aiming at reducing transit time of goods across borders can increase trade flows significantly and thus drive growth and job creation in low- and middle-income countries. The WTO estimates that a full implementation of the TFA can add $1 trillion to the global GDP annually and 21 million new jobs globally.

A successful implementation will therefore benefit all countries involved, as well as importers and exporters. The first step for the Global Alliance for Trade Facilitation is to diagnose the largest trade barriers in specific countries. A new player on the scale of the Global Alliance for Trade should actually be major news. News of it came to me, not via the BBC but from Maersk's own Twitter feed. That speaks to the irrelevance of the media.

It is not yet clear just how influential this alliance will be but in the past, WTO alliances have helped shape global regulations that even the EU has adopted. It will likely have a much greater consultative input than the EU in opening up new markets - and when it comes to the defining international agreements, it will sit alongside the EU as a power in it's own right.

This is another marker in the timeline of global trade whereby the big deals are no longer between nations and blocs but between non state actors and regulatory agencies. This is very much the birth of a global single market.

In addition to Myanmar, Norway, Vietnam, Brunei, Zambia and Ukraine, the following WTO members have also accepted the TFA: Hong Kong China, Singapore, the United States, Mauritius, Malaysia, Japan, Australia, Botswana, Trinidad and Tobago, the Republic of Korea, Nicaragua, Niger, Belize, Switzerland, Chinese Taipei, China, Liechtenstein, Lao PDR, New Zealand, Togo, Thailand, the European Union (on behalf of its 28 member states), the former Yugoslav Republic of Macedonia, Pakistan, Panama, Guyana, Côte d’Ivoire, Grenada, Saint Lucia and Kenya.

This is a forum where nation can speak unto nation in bringing down barriers to trade. Unless of course you happen to be an EU member, where instead we have to go off to Brussels and ask nicely if they would consider raising our concerns on our behalf.

Just imagine that - a global forum on trade where little old Norway can have an independent vote, yet the UK, the fifth largest economy cannot. This is the real top table - this is the real engine of global trade. This is real global engagement. From this will flow new agreements to adopt new regulations.

The notion that we would be isolated outside the EU ignores the fact that nobody is isolated - and nations are free to pick and choose alliances and coalitions according to what suits their most pressing trade concerns. There are any number of configurations that can rival the EU as a power - and even the threat of voting against the EU (if we had our own vote) would be leverage we do not presently have as members. As members we can be summarily overruled - and we are forced to adopt the common EU position.

Very often that common position is less to do with doing what is best for global trade than it is protecting the EU's internal economy. Far from engaging with the world, the EU is putting up more barriers and acting on the global stage with a view to asserting its own presence rather than working in the spirit of cooperation.

In fact the EU is often criticised by global regulatory agencies and trade alliances for gold plating regulations specifically to create further barriers and tilt the playing field in its own favour. It stands in the way of better regulation and creates administrative burdens where none previously existed. As it seeks to usurp its own member states, critical regional expertise is muscled out, depriving the global community of valued input.

As we continuously point out, there is a whole universe of trade and governance over and above the EU and the myopic fixation we have with little Europe is damaging our global standing as well as holding back global progress. It's time to cut the apron strings and step out into the new world. The EU will still be our ally and friend, but we cannot allow it to be our master. The world has moved on and the future is different to the one they imagined.

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