Friday, 29 December 2017

Brexit: bad for GDP, good for Britain.

I've been up in Bradford for Christmas. After ten years of being down in Bristol, visiting Yorkshire infrequently, the changes I see are more noticeable. It's good and bad. Of all the cities in the UK I would say Bradford was the most improved. It looks richer, tidier and in a lot of ways is more vibrant now than ever it was.

More than anything it's the march of technology and development. The shop fronts look more modern, the houses have double glazing, the derelict mills are gone, and the city centre facelift looks superb. It's also busier than it was. The economy is undoubtedly better and that is because of immigration.

Now if I were writing about a London conurb this would sound a lot like an article protesting gentrification. But it isn't. The bottom line is, it's improved only in terms of conveniences available and superficially how the place looks. I would, however, hate to move back here.

At the bottom of the hill there used to be a police station. It was pulled down some years ago and the site lay derelict. It is now a KFC drive through. It's a busy roundabout where traffic was always bad. It is now immeasurably worse are the queue for processed chicken extends half way up the hill. It's a bloody nuisance.

Meanwhile, the council has given planning permission for another takeaway on the corner of our road. The three parking pays reserved for the elderly flats are now used by patrons of the takeaway while the road entrance is blocked by careless parking. You can't get out on to the main road because people park right on the corner. It's dangerous. You just can't see.

Moreover, the unmade road now has eight inch deep potholes from all the extra traffic. It's an unadopted road so nobody will do anything about it. It will only get worse. There was a time when people used to do their bit and take care of their part of the street but that doesn't happen anymore. The population of the street is forever in flux and there is a high churn rate. It also used to be that my mum would look after the elderly residents on the street. Nobody will do the same for her.

All of this was totally predictable. Only a moron would put a KFC on a busy roundabout and the council was asked not to grant permission for a takeaway. Residents were completely ignored, their lives have been made worse and they are left to deal with the consequences - less safe roads, more noise, more traffic and more selfish antisocial behaviour.

The high street is also worse. It was simply not designed to take the current volumes of traffic and though there are now speed bumps, it makes little difference as cars get bigger. People who could make do with a Fiesta now have chunky 4x4 hybrids like that stupid Nissan Juke thing. The bottom line is there are too many people and too many cars and our little suburb can't cope with the stress.

One of Dad's grumbles is that at school closing time parents used to walk to the local school to pick up their offspring. Now the road over the way is choked full of obese mums sitting in their cars, arriving twenty minutes early to find a parking spot - so they are not doing it to save time in the day. It's pure selfishness.

There are a number of factors at work here. As a wealthier society we have more conveniences and we expect and demand more. Everything is available to us and we want it on our doorsteps or delivered to our door. It's making us more sedentary, fatter, lazier.

But there is also a total breakdown in governance. Seemingly the council has abandoned any sort of planning and of what there is, there is no assessment of externalities and the impact on safety and life quality. All the while infrastructure crumbles while we import yet more people.

We are told the answer is to build more houses, which is is happening, but this is without regard to the stresses more housing puts on sewerage, water, traffic and public transport - to say nothing of dentists and GPs. A friend in Didcot notes that there are thousands of new houses planned, turning Didcot into a giant commuter dormitory for London when there is no extra rail capacity and little practical possibility of it.

This then has ramifications for the villages in the home counties with the rural ancient and charm - much of which adds to the character of the nation. Though we can't freeze everything in aspic there are some things more valuable than increments in GDP.

This is lost on policymakers whose sole preoccupation is chasing the holy grail of growth to the abandonment of all other concerns. The pace of development cannot keep up and now we are told by BBC news this morning that if we have health concerns we should check "internet websites" before booking a GP appointment - and the plod will no longer investigate thefts under £200.

All the while, the legal system is collapsing, legal aid has been destroyed, rents are climbing still and council tax is going to rise too while wages stagnate. Meanwhile politics retreats into its habitual trivia and we don't dare debate the sensitive social problems or address our collective denial of Child Sexual Exploitation.

This is where the left will chastise us Brexiters saying that our problems are the result of cuts and underinvestment. In some respects that holds but in other respects we have to ask serious questions about what we can still expect the state to provide and how we modernise services to meet the challenges of this wholly different country we have now. But that is not enough.

There are technical, material and health challenges to overcome but society itself is also disintegrating, ever more atomised and politics is drifting toward the tribal retail politics built on identity lines where they who can claim the most righteous victimhood win the spoils of government largesse.

I am of the view that across the board we are faced with problems evolving at a pace that our politics is not equipped to cope with. A major part of that problem is that politics is increasingly done in London with not nearly enough subsidiarity or localism, and is too remote to ever be in touch.

One facet in the Twitter debate I have noticed is that I may as well be talking about the politics of a different country when debating with London policy wonks. Ever quick to label me as a xenophobe or racist for pointing out things that do happen in the back hills of the Pennines, they simply do not recognise the picture I paint. Multiculturalism for a privately educated middle class policy wonk means novelty Lebanese cafes in Shepherd's Bush. In Rotherham it means child rape.

Put simply, a politics so remote that does not understand the country it governs can never hope to govern in the best interests of the country. I'm not surprised the Scottish want independence, and as a Yorkshireman I'm starting to think the North needs its own independence movement.

Even the definition of working class is somewhat fluid here. There is a distinct difference between Bradford and Bristol. Bradford is poorer, the pubs are dirty, dilapidated and barely making a profit. In Bristol I just don't see that kind of neglect. The people are different, the economy is different.

We are told that we have experienced ten years of austerity. But actually it's a meaningless word. Places like Dewsbury have never known anything but austerity. A pint of beer is still £2.50. A taxi ride over a few miles is a fiver compared with the twenty quid I would pay in Bristol. This is why the politics is so very different.

This is where Brexit is necessary. We are told that the regions are dependent on EU funding, but that is remote decision making, remote prioritisation where corporate scale quangos make the decisions in isolation of local politics, local politics is utterly toothless and constrained by the the invisible governance dictated by EU level targets and directives.

We also need a slowdown. Half the problem is the transience and the inability to keep pace with change. Community cohesion is impossible when everything is always in flux. Whatever the statistics may tell policymakers; that immigration is universally beneficial, it is at odds with the consequences we experience in our lives that these people are mostly insulated from.

And then there is the economic reconfiguration we are about to have. This is what I want to see the most. While various economic factors have started to bite in recent years, the consumer culture has barely changed. Habits have changed but still we are used to a wide array of readily available goods with seasonal foods being available all year round. Everything about modern Britain is geared to instant gratification and convenience. It's a facet of British society I like the least.

What we have seen with increased availability is a collapse in price of what were once luxury items and with an crease in availability we see a corresponding shift in attitudes to how things are valued. There is certainly no evidence of an austere mindset and that is what results in the fundamentally selfish behaviours we see where everyone is on the make and everybody feels entitled to everything. Certainly the universalism of welfare contributes to that.

This blog has written at lengths about what would happen if we left the EU without a deal where we experience rapid and sudden changes we are not equipped to cope with. But now it looks like we will leave with a deal, leaving the single market. This means the changes will be consequential but more gradual. Most won't even attribute it to the Brexit because it will be difficult to detect.

With a declining pound there will be fewer incentives for transient workers, and if business wants new talent they will have to train it. Seasonal goods will not be available all year round. People will have to think twice about gorging themselves on KFC. They will have to think twice about using the car to go two minutes down the road to pick up the kids from school. They will have to reconsider owning two cars - and maybe they might lose some weight by walking to the shops.

I think it will be the little things that result in subtle changes of behaviour. It will change the way business operates and as we see more import substitution we will see the range and availability of goods going back to where it was in the eighties. Superficially that sounds bad but then we still have Amazon so it's not like we are going back to the dark ages of having to make a pair of scuffed Clarke's shoes last an entire year. It's more about restoring the value people place on things and not treating them so abysmally.

Effectively I see a re-balancing of, to coin a phrase, the "UK single market" where the non-London economy, and consequently the politics, converges. I'm certainly not going to lose any sleep about the housing bubble bursting. We will see events encroaching on those aspects of life which have largely been settled for decades. When that happens the staples of life once again become intensely political, and from there a number of conversations will open up about everything from trade to agriculture. Subjects which have long since disappeared from the Overton Window.

Whatever remainers might say about Brexit, Brexit will bring change - some of it positive and some of it regrettable. But therein lies the opportunity for change. Economic tides will change simply because they have to, forcing all of the tough choices and uncomfortable debates we've avoided. Had we voted to remain the trends I outline in this post would continue unabated and no doubt the establishment would have taken the remain vote as a vote of confidence and would take no steps to reform itself. They would steam ahead with the next level of EU integration.

Brexiters have been characterised as those who want to wind back the clock. That has never been true, but I am certainly not opposed to slowing the clock, to let things settle, to let systems catch up, to give our public sector a chance of coping with the stresses. Britain also needs space for the divisions to heal. That cannot happen with everything in flux as we drop all our defences against hyper-globalisation.

We should also note that whenever there is change there is innovation. Shifts of supply chains and changes in systems often result in new opportunities and there will be a number of new avenues to explore.

In this, I'm certainly not promising sunlit uplands - and this government will make Brexit cost far more than it ever should. That was always the most likely consequence of the vote. I do not, though, regret voting to leave. The opportunity of uncertainty is far more appealing than the leaden, obese, selfish society as we find it now. Governance and politics is falling apart and has been for some time now. This is our opportunity to arrest the decline. If we can do that, Brexit will have been worth the pain. If not, then we have simply taken the short cut to where we were headed anyway.

Monday, 25 December 2017

What's wrong with Bognor Regis?

I must confess there are few things I care less about than the colour of my passport. In fact my passport is something I rarely give any thought to. More often than not it's just an identity document in order to gain security clearance to work on MoD projects. I've only used it to pass through a port three times in the last ten years.

It's not that I lack the ambition to travel. I just never have the time or the money. Then as far as European travel goes, I'm just not all that excited by the idea. One European city is much the same as another. Apparently, though, this makes me a lesser species in the eyes of remainers.

As Spiked Online notes, the hysteria over blue passports reveals a sickening remainer pathology. As one specimen tweets "Weird that the people most happy about #bluepassport are the people who don’t travel further than Bognor Regis".

As it happens I don't often travel much further than Bognor Regis, largely because it's on the outer edge of my single day operational radius if I'm setting out from Bristol. As it happens I prefer Lyme Regis because the pork belly roast at the Royal Standard is sublime. But then on any given day off I have plenty other destinations to choose from.

Last year on a whim I ventured out to Pembroke Dock whereupon I discovered the Flying Boat Museum, which is a memorial to Pembroke Dock's history as the world's busiest port for flying boats during the war. Home to Sunderland flying boats, the port played a pivotal role in the Battle of the Atlantic. I didn't know that. It gave me some reading to do.

On the drive out you pass Port Talbot and what is left of the steel works. The port there was once an industrial gateway to the world. It is still an active port. That was worth a look. As were the Napoleonic era barracks and forts along the Pembroke coastline. So too was the artillery range further along the coast. Where else can you see Challenger tanks firing live munitions?

Then there's other days where I might venture down to Weymouth and Portland. I recently discovered Castletown by the remains of HMS Osprey, where the D-Day embarkation ramps remain in tact and a piece of Mulberry harbour is moored just offshore. In its own right Portland peninsula is a fascinating drive out. The prison built into the rock face is like nothing I've ever seen. Nowhere will you get a better view of Chesil Beach - a unique shingle beach spanning the Dorset coast.

I'm also quite a fan of Portsmouth. I've had a few nice days out there in recent years. The submarine museum, HMS Victory and then a ride out on the hovercraft to the Isle of Wight. All along the south coast there are hidden treasures. Henry VIII's device forts, the fishing village at Beer, Lulworth Cove, The Tank Museum and the cliffs at Sidmouth. It's taken me a few years to get round all of it and I still haven't seen it all. 

Being that I'm from Yorkshire, I've also done just about every road in the north of England. Setting out from Bradford, within a couple of hours you can be high in the Peak District, the Cumbrian lakes, Spurn Point on the Humber, or deep in the Yorkshire Dales. Castles, cathedrals, ancient ruins, windswept beaches - we've really got it all.

Now I could, if I saved hard, fork out the money for flights and hotels to do a week in Berlin or Rome, but that would come at the expense of not being able to explore where I live - not being able to sit with a pint by the harbour watching the fishing boats come into Falmouth. Too high a price for me. 

I know plenty of easyjetters who like to plaster their social media accounts with pictures of European cities. That's their deal and their choice. Unsurprisingly, they are nearly all from London and would have a panic attack if forced to travel outside of the M25 - and have probably ventured no further north than Milton Keynes. People whose sole definition of the UK seaside is Brighton.  

I am often told that travel broadens the mind, but I see no real evidence of that from the humblebrags I see on Facebook. As it happens I find easyjetters to be among the most superficial and shallow individuals I know. People for whom a passport is just a travel document and not indivisible from citizenship and all that British citizenship confers.

As it happens, you will be hard pressed to find anyone who really cares what colour their passport is, but the subordination to the European Union - emblazoned on passports is more than just symbolic. It stands there as a reminder of something that was done to us without consent. Meanwhile the reaction from remainers is once again not rooted in a principled devotion to the EU, rather it is an expression of grief that they may experience some minor administrative inconvenience at the airport. 

As it happens this is all the daftest of remainer histrionics yet. It is highly unlikely that Britain will install a draconian system of border checks, and as far as casual travel and work goes we will end up with something akin with the EEA or Switzerland. It wasn't even that laborious prior to freedom of movement and enhancements in technology will remove most of the extra burden. It's not that big a deal.

Reamainers will only see this in terms of the rights lost. I have yet to encounter one who sees it as an exchange for the repatriation of decision making and greater accountability. That is of no value to them. We are dealing with people who don't see a problem and would refuse to see it to the end of time. Their personal convenience trumps all other concerns. 

This is where I have very little sympathy and start to think that maybe things should be a little less convenient. It may very well change some of their habits and attitudes. If these people knew this island half as well as I do, they perhaps wouldn't despise it and its peoples as much as they clearly do. That may go some way toward healing the divisions the Brexit vote has exposed. 

Sunday, 24 December 2017

The kingdom of the blind

As a political campaigner I spend most of my time where I can usefully reach the most people. These days that's Twitter. Though it is an ecosystem of diverse people it has its own unwritten rules and its own narratives, and in a hypersensitive environment one finds oneself treading on eggshells and self-censoring. Whether you know it or not you are gradually conditioned to that particular domain.

Consequently there is a cultural drift where my everyday political discourse detached from ordinary people for whom politics is a less obsessive activity. This is most noticeable on my annual Christmas venture back to my hometown where I realise I'm far more politically correct than I imagine myself to be - and for the rest of the time, I'm talking about concepts which are generally not debated in the public sphere. Certainly none of my drinking companions have WTO level trade disputes as part of their political lexicon. I would sincerely hope they have better things to do.

That then begs the question as to whether I'm out of touch with politics or whether they are. Keeping on top of the issues is a full time job and over time my priorities will drift from theirs. In some respects I have become part of the political bubble I have always warned about.

I am also reminded that people don't change much. Very often people's politics don't really evolve in adult life. People tend to form their world view in their early twenties and the narratives therein gradually become a part of their identity. This is why it's so difficult to get people to change their opinions.

Generally, people seek out like minded people and form communities and parties based on identity. Politics and identity are virtually indivisible. Should a person change their minds about a fundamental belief then it means breaking with all they have ever known - and for the most part, people don't want to. It's too much hassle.

This is the power that narratives hold over people. Everyone has their tailored idea of who the victim is and who the oppressor is. People also like to keep it simple. They don't want complications and if a comfortable narrative works for them then they will resist any new information which complicates it. In my experience very few people have the curiosity to keep evolving politically.

I suspect this is a natural behaviour, but I also suspect there are degrees of it. In the UK it is particularly bad as narratives are passed down through the generations. It is a product of political stability and certainty. We are used to the comfortable notion of the USA as the world hegemon and the dominant military and cultural power. From there flow all the pub bore narratives about Western capitalist cultural imperialism.

This foundation has always formed the basis of the worldview for the working class counter culture which in part explains the preference on the left for the European Union. For whatever it may be, it has the one virtue of not being the USA. If forced to choose the left prefers the "social democracy" of the EU to the capitalist US. This is a narrative almost as old as me, but was reinforced by the US invasion of Iraq which became a posterchild for US corporate rent-seeking.

The reality, however, is considerably different now. In the same way that the Falklands was the last British righteous victory, Iraq was the US expending the last of its moral authority and military power. Since then the tides of power have shifted. The US is now outspoken in the UN General Assembly, increasingly isolationist in trade and regulatory affairs, and in the global trade race China is sweeping the board.

Were it not for America's cultural exports through Hollywood, by now people would start to notice that the USA is no longer the global superpower it once was. It's drowning in debt, its infrastructure is failing and it now has third world levels of poverty. The American dream is over all bar the waking up.

In more ways than one the West has failed to notice the march of globalisation. Our political narratives are at least twenty years out of date. Here in the UK our Conservatives think leaving the EU means deregulation as though globalisation of regulation never happened, Labour want to reinstall post war era socialism, and the counter culture still believes the USA is the Great Satan.

We are, however, in a new age, where the lines are no longer clear or convenient and nobody really knows who the true enemy is now. We're in the age of cyber warfare in a global battle of ideas where political forces are loyal to no country or bloc. Our establishment politics is no longer equipped for it and we lack the lexicon to even adequately address it.

All these years I have been writing about how our political elites are aloof and out of touch but it turns out that the people are not really all that in touch either. The more complex it gets the less they want to know.

I am, therefore, troubled by what lies ahead. Collectively we are in a deep slumber while our political machinery is broken. A vital political muscle has atrophied and all the warning systems are dysfunctional. Through Brexit most certainly is a wake up call of a sort, the debate is still Brusselscentric and still bogged down in all the classic dogmas. The debate we are having now differs little from that which we were having in 1975.

As we leave the EU we are rejoining the world, but that world looks very different from the one we knew. A question mark hangs over all of the twentieth century norms from trade to employment, money and wealth. Many of our assumptions are being eroded and our inherent sense of entitlement looks increasingly unsustainable.

In this I can't help thinking that Brexit is becoming its own self-absorbed little bubble failing to take account of the seismic shifts in geopolitics where we a no longer able to meaningfully influence events from inside or out of the EU. Britain's geopolitical impotence is not the product of Brexit, rather it is a decades long trend that couldn't even be arrested by EU membership.

Whether or not Brexit delivers the wake up call we hoped it would remains to be seen. There is certainly no guarantee of that. It may be that we have simply added yet another distraction and yet more noise and our political elites will continue to hide from reality. Without being alert to the gargantuan shift in global tides, Britain risks being a passenger of events and rudderless in a storm.

Throughout the Brexit campaign I sought to bring attention to the explosion of global governance and the privatisation of lawmaking. Shifting the Overton window to deal with this is no easy feat. Our establishment is habitually fixated on Brussels and has no concept of anything that lies beyond. Just as my Bradford drinking pals on a foggy Christmas eve don't want to know, nor do our corps of political correspondents. From the top to the bottom of society we luxuriate in settled and comforting narratives. That, not Brexit, will be our downfall.

Wednesday, 20 December 2017

Another day at the Brexit coalface

Today I watched the DExEU committee meeting so you don't have to. The short version is MPs are still struggling with the basic concepts but very slowly getting there. The expert witnesses leave a lot to be desired. The egregious Michael Dougan being one of them.

They are unable to pin down the nature of any future agreement having no concrete definitions of what "full regulatory alignment" means. If they understood how the system works the would know that you need to be a member of the EU's regulatory functions like REACH. The government is still under the impression that "full regulatory alignment" can be tortured to mean something else without the same levels of obligations.

What we did get was a surprising admission in unanimity from the panel was the conclusion that the functions of the single market were more pertinent to frictionless borders than the customs union. This is a point I have been hammering for some months now because people still seem to think the customs union has something to do with customs posts open borders.

On this, the chatterati are still putting it about that there are no alternative solutions to a customs union in order to eliminate the declaration paperwork on tariffs and rules of origin. As much as anything they don't want to know because even the legal experts don't want to engage in that level of detail. It requires some creativity but I still think the customs union aspect is not required.

I think it can be done in the same way as tax self-assessment where the UK government pays the difference in monthly payments to the EU. If it requires any physical infrastructure on the NI border then it's minimal. and discreet.

Whether or not MPs fully grasped what they were told, I cannot say, but I sincerely doubt it. The only one showing promise is Stephen Kinnock for whom I have an emerging respect.

There was some talk about what shape the interim period is going to take. There is considerable uncertainty as to the legality of this and in what from it will take. The government wants to be formally out of the EU by march 2019 and the EU cannot negotiate with a current member, so they are working on the assumption of a "vassal state" framework where we comply with all the rules but with no voting rights.

While that seems simple, there are suggestions that this in itself would require a new treaty and consequently a ratification referendum - and that won't even be the final deal. All of this will have to come out in the wash since even the EU does not as yet have a concrete position on it. It also appears that Mrs May still thinks the full partnership agreement will be concluded at point of departure.

What it looks like to me is a dance of the seven veils where each layer is revealed overtime and we confront each reality as it arises where we will see the UK forced to "capitulate" to reality every single time.

The consequence of this is that we will have a long and tortuous process, where the negotiations take far longer than anyone imagined. There is talk of limiting the interim period to one or two years, but nobody serious thinks it can be done in a short time. There is a good chance we will be in Brexit limbo for four years or more.

Assuming things do not go horribly wrong and we manage to avoid accidental hard Brexit, it looks to me like we will end up negotiating an enhanced FTA with all the peripheral agreements on things like Euratom. They will find fudges along the lines of observer membership for things like EMA and REACH.

Effectively they will be rebuilding the EEA from scratch along with new institutions to service it. This is the long way around that could have very easily been solved simply by retaining the EEA and configuring it over time through the native institutional mechanisms. We will instead end up with something inferior to it.

Having said that, the legal complexity around the interim period may present a window where the EEA looks like the path of least resistance so we could very well still remain in the formal single market. We will also have a customs union agreement simply because they don't have the wit or imagination to do anything else.

Whichever path it takes it will at the very least avoid a calamity, though the extended uncertainty will doubtlessly take its toll. This will then lead to charges of "Brexit in name only" and nobody will be especially satisfied with it. Ultra Brexiteers are going to hate it and remainers are going to wonder why we even bothered since we will, in effect, be opting back in to foundation constructs of the EU.

I take the view one way or another the UK will be a distinct customs entity with its own trade policy - and though it will be constrained by whatever the new relationship is, we will still have a functioning firewall between us and further EU integration. We will have the standard safeguard measures at our disposal and anything else is a bonus. We won't really know until we get there.

This of course, is all speculation. Domestic politics is fragile and the EU is constrained in what it can offer by way of its own rigid framework and international law. It may find it is unable to accomodate a number of UK requirements which may dictate an entirely unanticipated path.

The fragility of the May government means that the ultras might very well have to fall into line and behave themselves. Prior to the snap election they had enough wiggle room to rock the boat but if they pull any stunts they may very well end up handing the Brexit process to Corbyn, which is their worst nightmare. Consequently Mrs May will have a safer run than even she was expecting. She has the headroom to make more compromises - not least since the public mood has likely softened and understanding of the issues has proliferated.

The only immediate certainty in all this is some of the government's wilder self-deceptions are about to come crashing down. Only when that happens are we likely to see any meaningful progress. Firm decisions can only be made when this administration confronts the reality of our predicament.

Tuesday, 19 December 2017

No, you're not an expert on Brexit.

If there is one thing that winds me up about the Brexit debate is the procession of self-appointed Brexperts touting their wares as though they were entitled to dictate. The only time in recent memory I have had cause to agree with Michael Gove was when he said we are all sick of experts. If you're not, you certainly should be.

Some would have it that I am an "IT expert". After twenty years of developing compliance software you learn a thing or two. There are a number of fields I have a near total grasp of, but the field of IT extends into network and internet security, high and low level programming, SQL and non-SQL databases, web services, encryption, bots, blockchain - and several competing platforms to do essentially the same thing.

In a lifetime I could never hope to master all of it and in some cases would, rightly, never be allowed anywhere near it. I can produce a passable website from scratch but how the internet actually works, to me is "here be dragons".

The same applies to Brexit. I have some emergent expertise in some fields but I would never dare venture into the realms of the financial sector or human rights law. And when it comes to immigration I am far more interested in the views of someone actually living at the leading edge of it - rather than an upper middle class ultra-white Waitrose liberal whose only real exposure to immigration is the similarly privileged people they went to university with.

Then when it comes to trade, it sucks in everything from tariffs and all those areas only VAT accountants understand, right through to anti-counterfeiting measures best known by port officials and food safety inspectors. There is simply no way to know it all and if you only have a functioning idea of what it is you don't know then you are doing quite well.

We should also note that trade is multidisciplinary wherein the modern a trade law wonk is sometimes less useful than a top veterinary official. Of the many types of trade agreement there are multiple configurations, some of which couldn't be less to do with tariffs. Establishing standards for the auction of airport landing slots is just as political as a round of talks on coffee tariffs.

Just lately, as a thought exercise, I have started thinking about trade strategy as though tariffs did not exist, looking at all the different means by which countries and blocs can bring about protectionist barriers. Even with regulatory harmonisation or mutual standards (as the EU demonstrates) there are still loopholes and workarounds. Thus, I conclude that there will be a need for multilateral trade negotiations for as long as goods and services cross borders.

We live in a world where trade and strategic alliances are always shifting, and we are moving beyond the geographic. The power plays are now between the major global public and private regulators and corporates and in some areas it is clear we are evolving into a state of global oligarchy where even the EU is a passenger. In a world of distributed technocracy localised sovereignty remains the best form of defence.

Though we see obvious advantages in taking on the likes of Google collectively, when blocs like the EU and entities like the WTO are themselves a nest of corporate lobbying, the nation state is still the only effective arena for democratic politics. Economists may well be able to calculate the best means of stimulating GDP but that says nothing of how we define ourselves, our borders and the values we uphold. 

There is also another good reason to dispense with experts. There seems to be a quest to seek out a perfect answer to a complex question. But there is no perfect answer because you have to hold this Brexit crystal up to the light and see the many reflections it casts. It is entirely a matter of perspective and it extends beyond the realms of economics and into the domain of identity, culture, heritage, class and a myriad of rational and irrational concerns, all of which have equal standing. 

So diverse are the views that there is only really one way to settle it. Democracy. Imperfect though it may be, it is at least fair. I have my my voice, as you have yours. Of my own volition I choose to be more informed than most, and I use the tools available to me to amplify my voice. If, however, what is won in democracy is overturned by those who profess to expertise then we have indeed turned a dark corner. One in which the interests of commerce trample on the wishes of electorates. For that reason I continue the fight to leave the EU. 

Saturday, 16 December 2017

Yes, Brexit is protectionist. So what?

Though people say trade is complex, it isn't that complex when you find your feet with it. Hosuk Lee-Makiyama, a reputable expert on top tier trade issues, recently remarked that it takes about five minutes to learn but a lifetime to master. I couldn't agree more. The concept of non-tariff barriers is far from rocket science but the politics of it is a wholly different matter.

This is why generalists professing trade expertise can very easily wander into a minefield. It is too big for any one person to fully comprehend - and certainly difficult to contextualise without real world experience. This is why one should be highly cautious of experts. It takes a breadth of experience to fully understand how it all fits together.

Over the years I've developed a number of systems for standards and regulatory compliance. Until about three years before the referendum I'd never really given much thought as to how such systems related to trade. Like most Brexiters I had a pretty insubstantial grasp of how trade works and it never occurred to me that the things I've learned over the years would be more relevant than ever.

Working in aerospace engineering alongside fatigue and design tolerance engineers, just about everything we did was standards based from the actual design and materials, right through to the management methods, document controls and authorisation processes.

If an aircraft crashes and it's a repair that has failed then it needs to be traced to the design engineer. The decision making and justifications have to be recorded and the materials used must have an audit trail right down to the quarry where the ores were extracted. Traceability is everything when it comes to quality - and for goods to qualify for use on commercial airlines there have to be stringent processes to ensure we import the real deal rather than counterfeit components.

Having built a number of systems for those purposes, and having learned about the functioning of the single market, I probably have a better idea than most how it all works end to end - same as food safety and chemicals professionals have produced the best Brexit related impact assessment material.

That however, is in just one type of supply chain and says nothing of financial services and intellectual property; areas where it's very easy to get the basics wrong which is why I tend not to comment on those such affairs.

What one notes, though, is a theme not unfamiliar to regular readers of this blog. Whichever sector you look at there are national, regional and international dimensions to it. Aerospace is hugely influenced by ISO, IEC and a number of specialist bodies. There is a entire chain of governance in which the EU is only part of a much wider ecosystem. The same applies to absolutely everything else. There are systems within systems with multiple overlaps and shared jurisdictions. The notion of the EU being the alpha and omega of regulation is overly simplistic and wrong.

Consequently, when it comes to the Brexit debate, mantras in respect of having "no say in the rules" and having no influence is reductio ad absurdum. There are levels of influence even for non-EU members like Norway, who wield considerable influence in everything from telecoms to fisheries.

What one notes is that influence in one domain often comes at the expense of influence in another. EU members cannot independently raise initiatives or WTO complaints. EU membership is also no guarantor of shaping outcomes. It's just a another body where the biggest corporate voices speak the loudest.

One high profile example of this, as mentioned before, is EU inspections for Citrus Black Spot - a fungal disease in fruit. Typically reports cite "EU regulations" as the reason for import restrictions. It isn't that. It's an EFSA risk assessment leading to increased inspections and creating delays causing South Africa to voluntarily terminate trade even though it meets the standards and qualifies for trade preferences.

The South African view is that the risk assessment criteria is the product of internal lobbying and is scientifically questionable. The Spanish government's position will undoubtedly be the product of lobbying by the Valencian Growers Association AVA-ASAJA. They have identified the weak spot in the system that allows them to push for EU level protectionist measures.

What we find is that, notwithstanding cooperation agreements on standards convergence, the risk assessment criteria is still more a political than scientific issue, it rests largely with the Commission, and though the IPPC can investigate, it can only challenge the validity of the risk assessment process rather than the actual verdict. If the process is found to be transparent and the specialists are sufficiently qualified then there is little anyone can do. 

This is where it's possible to overstate importance and usefulness of certain institutions and instruments within the trade ecosystem. Though WTO members can normally raise issues for consideration, panels must be formed, investigations undertaken and hearings scheduled. The process is time consuming and expensive thus, in most cases, an EU decision to exclude produce is usually final.

There are any number of loopholes in the system that make a mockery of the EU's trade liberalisation dogma. As previously noted, the European Commission is currently conducting a review of the Indian SPS inspection process and is considering a total ban on Indian seafood product imports. It recently increased the percentage of seafood imports from India that must go through inspection from 10 percent to 50 percent, after finding repeated violations of its standards for contamination.

On this score you can probably take it on trust that the Commission is being justifiably cautious in that Indian Food Safety standards are woefully underdeveloped and under enforced. A lot of work is going into modernisation but the system, to a point. has to function on trust - and with corruption in India being what it is, we are decades away from trade parity. Not for nothing are India-EU trade relations in their infancy. 

But then when it comes to standards improvement under the aegis of an EU cooperation agreement, we often find the goalpost shift time and again on the whim of EU producers - which is why we still manage to exclude Argentinian beef exports some twenty years after the BSE scare. That issue will run and run and will remain a talking point of trade debate for a decade or more. 

For as long as goods cross borders, foodstuffs especially, consumer confidence will always be a major factor. That in itself is a readily exploitable area for protectionism. So too are environmental concerns which is why big business just loves climate change. Any platform for regulation presents an opportunity to shaft one's competitor

The same goes for standards. The WHO Protocol to Eliminate Illicit Trade in Tobacco Products was the culmination of more than five years of complex negotiations at inter-governmental level. The Protocol contains a range of provisions and obligations for Governments who ratify this instrument, including measures and standards in the areas of Supply Chain Control.

That then started a corporate space race in the standards bodies as to what systems and methodologies will be used. This has been a long running saga in European standards politics and one of the most alarmingly corrupt.

And this is what makes the EU particularly objectionable in that it's really not up to us what we can import and what we can restrict, and unless an eco-lobbyist can popularise a panic over something like "chlorinated chicken" we have absolutely no idea what we are agreeing to. Big bang headline FTAs are of major propaganda importance for the EU so it will make a number of arcane compromises to ensure they succeed. Not always successfully. 

In this, it is hardly a surprise that TTIP failed. It was too big, too ambitious and shrouded in mystique. Something of its nature is impossible to take on trust. What makes the EU even more suspect is that these such deals are never defeated. They simply go into a cycle of review and will be fed in by the backdoor. No doubt TTIP will be installed by breaking it up into smaller, less controversial instruments of trade and national media will completely ignore it.

In the meantime we can be assured that if the EU wants a propaganda win by securing a headline deal with the USA it will devote some of its runtime to dismantling or modifying those aspects of its current acquis which stand in the way. The ongoing saga over endocrine disruptors is part and parcel of that. There is simply no possible way that trade conducted on this scale (and of this complexity) can ever be truly transparent or democratic. Are we to trust the EU when it is a nest of corporate lobbying? 

What we find with trade liberalisation is that it requires a great deal of compromise, considerable sacrifice and those most affected are the last to know and the least likely to have been consulted. Course, you can ask why it is that little old Wallonia can derail something like CETA yet Yorkshire must do as instructed by London. That is a seriously good question I hope we will address after Brexit. 

But then for the EU, what little democracy exists is increasingly going to be an obstacle to further trade increments. It will be interesting to see if the EU-Mercosur deal passes intact. Mercosur members Brazil, Argentina, Paraguay and Uruguay have pushed for an improvement on the EU offer of tariff-free imports for 70,000 tonnes a year of beef. They're not likely to get it and if the EU offered it, no doubt it would be shot down in the ratification process. 

That begs the question as to whether EU trade has peaked. We often hear that WTO multilateral initiatives have stalled, but will future EU deals be meaningful increments, and will they have worthwhile benefits to the UK? Moreover, there is a hypocrisy to address. The remain inclined will panic about possible agricultural liberalisation with the USA, but as yet have seen no moral panic over what a Mercosur deal could do to British agriculture. EU trade good, UK trade bad - it would seem. 

This, though, is not just a question of trade. The ongoing debate on globalisation is one of reconciliation between mutually exclusive concepts. Trade liberalisation is largely incompatible with sovereignty. The more the global rules based system develops the less meaningful sovereignty becomes. In exchange for the benefits of trade we increasingly cede control in what we are told is the common good. 

This is problematic for democracy in that we still find that, even leaving the EU, we are constrained by a number of global conventions and obligations. We are told that this is in the direct national interest and that we live in an age of interdependency and we should basically get used to not having a meaningful say. The trade scriptures say that protectionism is bad. 

As a one time liberal I subscribed to that dogma - but that is exactly what it is. Dogma. Trade policy is there to protect legitimate traders from the predatory practises of nations and corporations who seek to damage competitors by unfair means. By its very nature, therefore, an effective trade policy is "protectionist". We must re-learn this discipline. 

Every liberalisation measure must be done with due consideration to its economic and ecological impacts. But we must also ask whether populations have the sufficient power to call time on or temporarily suspend measures which may unnecessarily harm domestic objectives or interests. 

My deliberations have forced me to conclude that there is insufficient democracy or control as EU members - and even if there were adequate safeguard measures we have an establishment too lazy, venal and indifferent to invoke them - and is not sufficiently engaged with trade and EU governance to realise it's even possible. 

Brexit to my mind answers the call of taking back control simply by repatriating decisions over its external relations. At one time when trade were largely just a matter of tariffs it could be said that "pooling sovereignty" was a tolerable sacrifice but when modern trade methodologies deal with everything right through to labour laws (thus disempowering electorates, individuals and unions), this level of trade integration is a bridge too far. 

I'm not going argue that leaving the EU will bring about a free trade bonanza - and in fact, to experiment with the more radical ideas of the Tory right would be suicidal, but the case for repatriating decisionmaking is undeniable. It doesn't matter especially if we do adopt standards and regulations just so long as the decision rests entirely with parliament and that there is a means to pull the plug on select measures without having to do something quite so drastic as Brexit. Ceding the authority and placing all of our trade relations into a single treaty construct was deeply foolish.

Brexit has already brought the trade debate closer to home and has ignited a conversation about regulation and standards that has long been abandoned. There is, for the first time in a generation, a renewed institutional knowledge of the issues, public engagement and cross platform discussions in just about every field of endeavour. This is healthy.

What it looks like, however, is that the last to be plugged into this national conversation is our increasingly remote establishment - and our government especially. It looks like we are on course to make a number of serious but avoidable mistakes. This was always the danger with Brexit. A risk I accepted when I voted.

Though the consequences of that may well be miserable, we should also note that there are serious economic, cultural and societal problems we would be deferring by remaining, many of which would be exacerbated simply because we are disengaged from the decisions taken in our name. Ever more liberalisation means opening up our markets for speculation by predators and asset strippers - and though that is also an inherent risk of Brexit, we at least retain the power to institute corrective measures without having to beg the Commission.   

In this we should not lose sight of what we actually gain from all this. It is not measured by increments in GDP. What it means is that, as the global rules based system develops (or possibly collapses) the UK will become its own customs entirely with its own distinct third country relationships with the necessary sovereign powers defend our interests and do what it takes to compete. Our new relationships will be less focused on what the Spanish citrus lobby wants. 

If you talk to trade wonks they will often tell you that job losses as a result of free trade deals are just collateral damage - because some numbers on a screen somewhere say that's for the common good. I ask; by whose estimation? We are oft told that Brexiters "voted to self harm" but at least we are actually doing it for the principle of sovereignty and taking back control. The bovine notion that liberalisation for its own sake is a universal good is terrifying. 

For the time being we will be closely aligned with the EU and a lot of our decisions will have to be taken with due consideration to how our new relationship functions, but we cannot expect it to work right away. As a newly independent country we will have to learn the ropes as to how we act like one. Be under no illusions. Tough times are coming. 

What we can say though is that the UK will be rebuilding and remodelling according to the new settlement with every arm of the polity engaged in how that comes about. We are at least applying ourselves to the issues. Not so the EU which has once again looked at its many brush fires and concluded "more Europe" is the answer. These people simply do not learn. 

At some point Mrs Merkel's regime will come to an end and Germany will have its own soul searching to do. It maybe has one halfway competent administration left in its post-war settlement and then they have their own reckoning to come. There's no guarantee Poland is staying in the EU and Hungary has never looked like a committed member. Expansion in the Balkans is faltering, Ukraine is still a nest of corruption and immigration is going to be a major issue of Italy. This notion that the EU is working in harmony has never looked more risible. Brexit isn't Europe's biggest problem.

I have no crystal ball, I don't even know what is going to happen next week. What I do know though is that globally there are shifting tides and globalisation is entering a new phase of uncertainty. The power centres are shifting, technological disruption to trade is re-writing the rule book and the trends in regulation are shifting further away from the EU and into the private domain. The WTO is now openly collaborating with corporates and the game is shifting up a gear. All the accepted norms of legitimacy are going out the window. I'm not ok with this.

It's a long time since I had cause to agree with Spiked Online but Mick Hume has is down on this. "Whatever our internationalist aspirations, the truth is that the nation state is the only effective arena for democratic politics yet discovered. Any progressive-sounding talk of no borders or global democracy can only mean the world being run by the UN Security Council, or Europe being reordered by order of the European Commission". If Brexit is, as they say, protectionist, then it's a protection against that. And a very necessary one. 

Thursday, 14 December 2017

Naysayers be damned. There is life after Brexit.

This week Liam Fox announced £18 million in funding at the World Trade Organisation's largest ever Ministerial Conference in Argentina. The funding from the DfID "will help 51 of the world’s poorest countries produce products fit for export, trade more easily across borders and access untapped new markets which have the potential to create thousands of jobs and lift their citizens out of poverty".

£16 million of the funding will go to the WTO’s Enhanced Integrated Framework (EIF) programme, which helps governments and businesses build the capacity, infrastructure and policies needed to successfully export and trade. UK funding is already helping Zambian farmers harness the country’s huge export potential for honey, building the supply chains and regulatory compliance needed to export abroad.

A further £2 million will go to the WTO’s Standards and Trade Development Facility which helps developing countries meet international agricultural standards, enabling them to export more produce.

The STDF is an excellent example of an Aid-for-Trade partnership on strengthening sanitary and phytosanitary capacity to help developing countries gain and maintain market access. Since its creation in 2004, the STDF has delivered 150 projects to help developing countries improve their SPS capacity and promote safe trade in food and agricultural products.

This is, believe it or not, very seriously good news. This is where aid spending can make a real difference and if integrated into a wider trade strategy then we have the makings of a halfway intelligent trade policy. Though £2m isn't exactly staggering riches, in this domain small sums can do big things.

Mukhisa Kituyi, Secretary-General of UNCTAD remarked at the conference that "Existing waivers for commercial services export from LDCs will have little impact unless backed by lowered regulatory barriers and supply side capacity building". This tells us a lot of what we already know; that tinkering with tariffs is neither here nor there - but deregulation is precisely where we don't want to be not least because of the ramifications for existing UK-EU trade. We cannot enter a race to the bottom, therefore we must enter a trade space race to lift standards throughout.

The European Commission is currently conducting a review of the Indian SPS inspection process and is considering a total ban on Indian seafood product imports. It recently increased the percentage of seafood imports from India that must go through inspection from 10 percent to 50 percent, after finding repeated violations of its standards for contamination. Odisha, one of India's highest-producing seafood regions, is particularly exposed to barriers to trade with the EU. Its seafood exports to the EU have almost doubled to EUR 9.6m.

This is where the UK can and should intervene and no doubt has the business and cultural links necessary to enhance Indian aquaculture - and not a bad idea since fishing generally is likely to come under the microscope for reasons you might be familiar with. There are some bloody interesting things happening in aquaculture too. Proactive trade facilitation puts us first in line to promote UK technologies and business services.

The EU is presently ramping up its trade propaganda. Over the coming months and years they will announce and re-announce FTAs to world to give the impression it has the whole world already sewn up. What I note, though, is that EU partnership agreements are only as good as the investment poured into them and as EU members we do not have sole authority in how such funds are directed. Many such agreements amount to not very much. 

Free of the EU the UK will bring some £5bn in aid spending back in house. That can be turned to our advantage. If we are willing to put the work in (and the investment) then there is no shortage of things for the UK to get busy with that will serve the national interest. Naysayers be damned. There is life after Brexit. 

Wednesday, 13 December 2017

Soft Brexit is smart Brexit

Michel Barnier has stated countless times that the UK will not enter substantive trade talks until we have formally left the EU. The latest negotiating guidelines have been published. They detail the framework for the next round of talks where the main concern is the shape of the transition.

The view is that it will take a further two years to come to an agreement. One suspects, for the time being, the EU is politely skirting over the obvious that a trade agreement will take far longer than two years. This is so as not to frighten the horses. The UK can just about agree to two years on the terms outlined above. Beyond that the UK would expect to modify the terms since any longer is a long time to be in the EU without formal representation. We can only speculate. 

In this we have to look at what the UK is seeking to achieve. The UK wants more than Canada, less than Norway, and though it has hinted it does not seek the same obligations, there have been hints from David Davis that we will, on some level, continue participation in a number of EU agencies like the EMA. 

We should not that we will need agreements to cover our participation in the European aviation market through to Euratom. Some areas will be easier than others to achieve. Euratom might very well be a simply copy of the Australian agreement whereas EU members might very well see an opportunity to cannibalise the UK's share of the aviation market and will seek extensive renegotiation. This is where the UK will likely be taken to the cleaners. 

As to the core aspects of trade, again we find the Northern Ireland issue right at the heart of it. If we wish to maintain a frictionless and open border then it will likely require continued harmonisation. The UK government view that we will be able to meaningfully diverge will be one of the first casualties of the talks. 

To have the same level of freedom of movement for goods we will need to maintain membership of regulatory frameworks like REACH. We will also require any number of mutual agreements on recognition of qualifications. There are more than three hundred such areas of cooperation. 

From there is it a matter of deciding what supervisory mechanisms will oversee it. The UK has a choice of associate Efta court membership or direct ECJ application. There are other means available but in all instances there is a heavy bias in favour of the ECJ. Effectively the UK is seeking a deep and comprehensive trade relationship - but it must concede that the level of participation required will necessitates continued budget contributions.    

In this we can expect the EU to cooperate. It has mechanisms for facilitating these kind of relationships. It is though, bound by certain constraints. If we seek only an FTA then it will be governed by the WTO rules on FTAs and therefore any concessions made to the UK could well be transferable to other FTA holders. It may not, therefore, be possible to grant the same level of access for services that EEA members enjoy.

The EU will also abide with its general principle that it will not recreate an EEA style agreement for the sole benefit of the UK so that it can evade obligations on freedom of movement. It will exact a price. The UK will be expected to reckon with the consequences of its choices. We stand to lose considerable market access - and again, where member states see an opportunity to cannibalise UK market share we can expect lengthy asymmetrical negotiations in the EU's favour. 

It is the view of The Leave Alliance that that any FTA negotiated with the EU will result in a far inferior trade relationship with few of the sovereign liberties than many leavers anticipated. Hardline leavers will be disappointed. 

Hardline leavers such as Ruth Lea furiously reject the EEA believing we would be supplicants to the EU. As it happens, were we in a deep and comprehensive FTA outside of the EEA framework it is actually more likely that the UK will be passive recipients of rules without much in the way of consultation or veto. Standard safeguard measures will be available but invoking them comes at the cost of market access. 

We are, therefore, back to our usual conclusion that an EEA Efta arrangement is the more intelligent approach. It has the merit of tried and tested infrastructure, full market access and avoids the risk of UK market share being traded away. The agreement already exists, we are already signatories to it, the terms are already known, and it would massively simplify and expedite our exit. 

What we note about the EEA agreement is that it allows for country specific protocols and is entirely configurable. Over time we can negotiate carve outs. Some suggest the EU would not be willing, but if we can demonstrate that our shift in trade direction in some sectors contributes to the corporate wealth of Europe then we can expect the EU, on occasion, to act in good faith. 

We are then left with the politically difficult issue of freedom of movement. As we continue to point out, this issue is not insurmountable. We would simply have to manage expectations. The choice is stark. The EU, for its own reasons, requires a liberal regime on movement of persons. It will uphold those principles and consequently we are forced to consider our priorities. 

What we would note is that in order to mount an effective post-Brexit trade policy we will have to invest heavily in cooperation programmes beyond the EU, economic partnership agreements and play a full and active role in international organisations. In this domain, multilateral initiatives stand or fall on the level of investment. Money talks. 

With that in mind the greater the hit to our economy by leaving the EU, the less funding will be available to mount the kind of proactive foreign and trade policy we need to deliver the potential gains promised by the leave campaign. Reaching zero tariff agreements is the least difficult part of trade. Maximising utilisation of trade preferences and increasing the profitability of the value chains therein requires a greater degree of engagement and that will require considerable foreign and domestic institutional infrastructure to service such agreements.

Because of the nature of the multiple compromises the UK will inevitably have to make, many of the assumed silver bullets will not be available to us. Though we are most certainly leaving the customs union we will have to stay closely aligned with it - not least to maintain open borders in Ireland. That means our future trade policy will depend more on economic partnerships rather than classic EU model FTAs. A lot will also stand or fall on how successfully we can navigate the many global forums in trade where standards and regulations take centre stage. This is something else that does not come for free. 

The danger of leaving the EEA is that Britain finds itself substantially poorer and unable to mount an effective trade policy and in so doing will gradually creep back into the EU regulatory ecosystem and like Switzerland will trade away sovereignty for market participation with none of the representation or consultation enjoyed by Norway. Exactly where we didn't want to be, and largely making the whole exercise pointless. A voluntary self-immolation for no discernible gain. 

Ultimately we have to safeguard European trade on the best possible terms simply because it is still where our geographical and cultural interests lie. Enhanced trade relations with our neighbour is essential and trade is unlikely to be replaced otherwise. UK-EU trade is on a wholly different level to everyone else in the world. For instance, how many ro-ro ferries are there plying the Atlantic, delivering perishable goods for immediate consumption and JIT components for retail sale and to supply manufacturing plants?

This kind of trade is only made possible by way of having no formalities at the borders. This is how goods arrive at their destination only a few hours after dispatch. This is not just a question of conformity to standards. Even fully compliant products shipped from the United States are subject to lengthy and sometimes intrusive border controls. Fortunately, with the longer shipping time, document checks can be made while the goods are still in transit, but it is still the case that trade with the US and other distant partners is in containerised or bulk cargo.

The nature of our trade with the EU, though, is the vast bulk (well over 70 percent) is in driver-accompanied loads. It's through the Channel tunnel or by short sea shipping, with no customs formalities of any nature. That trade was built up after we joined the EEC, and is basically a child of the Single Market. The trade relies on speed of throughput at the ports. There are not the facilities or infrastructure to deal with border checks. It couldn't survive the uncertainties of a rigorously policed border where lorries are routinely delayed by hours and can be held for days.

The issue at hand here is separating the political from the economic. As a leaver, I simply do not want to be in the EU. I want the UK to be a distinct customs entity where the decisionmaking over areas of economic cooperation stay under the direct control of the UK government and are not bundled into treaties which transfer authority. The EEA, though suboptimal, to me represents an adequate firewall against creeping EU federalism.

Now that we have left the EU we can see all the stops are pulled out to accelerate the EU's federalist agenda. Critics of Brexit argue that were we to remain a member we could continue to block these developments. What we would note, however, is that such measures are never blocked. The UK can only ever really slow it to a glacial pace - which is actually worse because the integration is then done by stealth and so slowly that it meets little direct opposition. 

We are, therefore, tasked with remaining part of the community of European nations in the same regulatory ecosystem, but in a framework which allows the EU to consolidate and form up around its Euro currency members, while Efta and the UK seek out relationships more befitting their cultural and political preferences. It would be curious for the UK to be entirely out on its own.

Internationally we are seeking to be part of a genuinely multilateral trading system. The constraints of the Common Commercial Policy are an obstacle to that. Brexit remedies this, but it need not be an either/or estimation between enhanced European cooperation and acting as a global citizen. Efta is entirely compatible with our ambitions of independence and to my mind a natural destination for the UK. 

Looking at the many compromises and difficult choices of Brexit it would be tempting to cave into the nihilism of hard Brexiters. It avoids a great many of the complexities but in so doing would be to embark upon a wholly destructive course with no idea of a destination, likely souring relations internationally and presenting us with some miserable consequences down the line. 

Hard Brexiters believe there are sweeping gestures and silver bullets in the domain of trade, but no such solutions exist. Intelligent trade policy takes patience, skill and determination and requires that we build, not destroy. We can either resort to unilateralism which can only blow up in our faces or we can look to enhance and democratise what we have already built as part of the EU - a regulatory framework extending well beyond the borders of it.

We are told by remainers that being an EEA member means having no say. This has never been an accurate depiction of the EEA option but we would note that Efta with the addition of the UK would be a power in its own right and one able to leverage far better terms under the EEA agreement. In this we can work toward a genuinely collaborative Europe and a single market encompassing the UK's non European allies. The single market is in part our creation so why should the EU be the sole controllers of it and why should it be an exclusively European affair?

Britain stands at a crossroads. Should we cut ourselves off from Europe entirely we will find ourselves adrift and at the mercy of global forces we cannot control or even mitigate. Instead we can maintain much of what is valued about the EU while disentangling ourselves from the political integration. From there we can build and develop our new position in the world. It makes zero sense to make the job harder and more expensive than it has to be. 

Tuesday, 12 December 2017

Yeah, Brexit it bad, but I'm still ok with it.

Last night I almost wrote a long piece on the politics of food safety risk assessment in the EU. There is not a lot of point though. Though I wish it were otherwise, the more effort and research that goes into a blog, the fewer people will read it.

What I did note, however, is unlike the USA where it's more science based, in the EU it's intensely political, almost entirely in the hands of the Commission and in places, as corrupt and protectionist as the EU gets. And it does beg the question as to whether we are better off out or whether we need to be in there to at least be able to defend ourselves in the few ways we can.

There are a lot of technical areas where I really have questioned the wisdom of Brexit. There are undoubtedly places where we will lose our voice in matters that have very serious ramifications for the UK economy and UK law. We do not get to legislate in isolation. EU law will continue to influence UK decisionmaking whatever happens.

By just about every technical and economic consideration we are on the back foot by leaving the EU. What makes it worse is manifest incompetence of our own government who will ultimately open the door for the UK economy to be cannibalised and UK market share in a number of sectors to be decimated. The subsequent expensive adjustments we will have to make will be all the pain of joining the single market with none of the benefits thereafter. And this is if we do actually leave with a deal. I'm not even convinced we will manage that.

One way or another this is going to be a very seriously ugly mess which will take a very long time to climb out of. There is also a very strong chance that we will be strong-armed into doing what we are told by Brussels more than we ever were as members. More so than if we stayed in the single market. 

Moreover, I am even less convinced it's a good idea when I look at my political allies. On the one hand we have the Kipper brigade and on the other, a snobby, aggressively arrogant, backstabbing, corrupt, self-serving Tory establishment impervious to reason, immunised to facts. I wasn't a fan of them before the referendum and I despise them with every fibre of my being now. Politically I have few allies.

But then I am reminded that while I have no love for my Brexiter compatriots, I have a deep seated pathological loathing of the opposition which cannot be remedied. The opposition being vapid, virtue signalling MPs, the entire media, all of the think tanks - and of course the EU which underpins the status quo, allowing these people to thrive.

There is no way you can expect adult decision making from this parliament and our media simply does not function as an informer. Brexit tells you that. Our MPs have zero comprehension of what is happening or why - and their only concern is to dilute Brexit to hold on to the status quo - which is already disintegrating.

Sooner or later, there's a giant shit sandwich on the horizon and we all have to take a bite. It as as I have thought for a very long time now. This political settlement is on borrowed time and I am astonished it has lasted this long. We are due a sort out.

In this my hatred of the anti-democratic EU is almost incidental. Not being in it is a happy event of itself just on principle, and in spirit, if not in fact, I am a hard Brexiter. Brexit in abstract of all technical concerns is a truly wonderful thing and one day soon I will celebrate. But this is as much a part of a culture war which is far from over. 

The societal divisions Brexit has shone a light on need resolving. The Tories most certainly have no answers but the nasty specimens on the left keep me awake at night. Ruthless, self-absorbed narcissistic socialist children with a zeal that puts the brownshirts to shame. 

Then, depressingly we have the second coffin lid to punch through. When we've left the EU it'll be interesting to see how reforms are constrained by those WTO rules Tories are so fond of. This generation's would-be eurosceptics will become the fiercest critics of the WTO and the "unelected bureaucrats" therein. A new crusade for sovereignty begins.

At the very least Brexit makes us a distinct customs entity and puts a stop to "ever closer union". We will have drawn a line in the sand but I have a feeling the Brexit process will make victory taste as hollow as defeat. Economically, socially, politically, we are headed for dark times.

The only comfort I take from this is that remaining would have been worse. I would rather be taking the first steps toward sorting it out than carry on having these moronic specimens carry on unchecked - taking us further down an avenue where politics is something done to us rather than being something in which we, the public, participate.

I am also certain that whatever Britain looks like in ten years, it will be one on its way to a new political settlement. One that is more befitting the UK in terms of its power, its place in the world and one that is better adjusted to the new century in ways that EU members won't be. Call it an instinct or a hunch - or even a reckless gamble, but I am firmly of the view that the Westminster-centric politics of the present will not survive Brexit. And that is the ultimate prize.

We have a loathsome left and the contemptible right and nothing to speak of in between. We learned from the Ukip and SNP experience that party politics as a model is utterly spent and the longer it lingers the more it is despised. If the Tories scrape a win at the next election it will only be to avoid the horrors of a Corbyn government. When he is gone, there will be no loyalty to the Tories. By then politics as we know it will be spent. From there, we start building a very different country.

What is certain is that Brexit will be an economic haircut. One which most certainly will force difficult choices as to what we can expect of the state and whether a take-all-you-can-get NHS and welfare system is sustainable. It will force the many white elephants on the drawing board to go in the bin and as it forces adult choices, the options will be limited for our wastrel politicians. It will be a wake up call for the public as much as the establishment.

For the time being we will linger in uncertainty. We still have a while to go before Article 50 talks are concluded and assuming we get that far we will remain in the EU on more or less the same terms until a new relationship is negotiated. We may yet see sense prevail and and make our way into Efta. That would be a win - but to get there will be a fight to the death. That seems a long shot right now but there is still everything to fight for. 

All I can say is that we have started something. Something big, something daunting, something significant that will consume British politics. Something that cannot be stopped. Something that pisses on just about everyone's bonfire. What's not to like?

Spiked loses the plot again

Says Brendan O'Neill of Spiked Online, "it is time we reckoned with the historic magnitude of what is happening in Britain right now. Democracy is being euthanised. This fact, this terrible fact, is too often obscured by the euphemism and cynicism of the anti-Brexit lobby, which is virtually the entire political class. It doesn’t speak in the language of dictatorship. It speaks in the pseudo-neutral language of ‘softening’ Brexit, of concession and compromise".

Essentially this is true. If you look at tonight's amendments to the Withdrawal Bill, we are not looking at informed attempts to preserve economic cooperation with the EU via single market instruments. Were that the case they would at least be using the correct terminology. Instead what we see is a dash for safety to evade any change at all.

This is essentially what makes it difficult to argue for continued EEA membership in that one's bedfellows are indeed those seeking to effectively erase the vote. Some, however, appreciate that real life gets in the way of the most noble of political ambitions - as we find with the Northern Irish border. Not so Brendan O'Neill.  

O'Neill has it that "The extent of May’s compromise was alarming, if not especially surprising. She erased all of her own ‘red lines’, particularly on the Single Market and the European Court of Justice. She conceded to the EU’s demand that if a suitable agreement is not reached on the Irish border, then the whole of the UK will remain aligned with the Single Market".

The fact of the matter is that it was never going to be any other way. Forty years of technical and economic cooperation are not erased with a single vote and sovereignty is not restored in a single bound. There are decisions to be made where we separate out the technical from the political. 

Our starting point is that we need a whole UK solution and one that maintains an open border in Northern Ireland without introducing any new barriers. Being that the EU has its own distinct legal personality, its own customs territory and is a sovereign entity, insofar as trade is concerned, it is already a "United States of Europe". It can and does dictate the terms of market participation and that is the source of its power. We are not, therefore, able to do as we please without due consideration for the sovereignty of our neighbours. 

Like it or not, the regulatory ecosystem of Europe is dominated by the EU and that is a fact of life with which we must contend. Where do we draw the line and how much is absolute sovereignty worth to us? Must everything be a matter for public consideration? How democratic must we be? 

For instance, what is Spiked Online's view on the management of ballast water discharges? Does it have a particular view on maritime surveillance? Or maybe the risk assessment criteria for phytosanitary protection measures? I perhaps missed the thundering Brendan O'Neill article where he skillfully dismantles the case for adopting UNECE standards on reflective strips for articulated trailers.

Perhaps Tom Slater has offered a view on aubergine marketing standards and the power rating for refrigerated ISO containers? These are quite obviously essential matters we must have full democratic control over and extensive public debate. We can't have faceless men in grey suits colluding to decide what radio frequency the Irish Sea coastguard services should use, can we?

Clearly an independent codetermination body like the Efta court insufficient. Down with this undemocratic nonsense! On reflection it's totally worth a hard border in Ireland so we can have referendums on the gradient of wheelchair ramps. I'm sure Spiked is itching to mount a campaign on the minimum fatigue life of fuselage fasteners.

The very idea of having to consult our neighbours and collaborate with them on common standards to avoid technical barriers to trade is an insult to our ancestors - they who fought on the beaches of Normandy to ensure those filthy hun could not impose their weather radar methodology on an unsuspecting public.

I'm glad Spiked is here to engage in these nuances - standing up for the huddled masses who for decades had their faces trampled into the floor by bureaucrats who won't rest until we all have the same non-glare wing mirrors. The man on the Clapham omnibus doesn't need elitist scientists working on disease control measures in plantlife. Who needs a common methodology on control of creutzfeldt jakob disease?

Time we turned it over to ordinary citizenry and spit in the faces of the elites. We take Gotham from the corrupt, the rich, the oppressors of generations - who have kept you down with myths of opportunity - and we give it back to you, the people. Gotham is yours. None shall interfere, do as you please.

Sunday, 10 December 2017

Into the fire...

The latest negotiating guidelines have been published. They will not come as any surprise to anyone except Mrs May and her Brexit brigade. This was always how it was going to be. Things are, finally, about to get interesting. Maybe.

Brexit: the case retaining the EEA

If the UK is set on having only an FTA with the EU then it is seeking a relationship governed by a particular set of WTO rules. Preferences extended to the UK may well have to be granted to others holding an FTA with the EU. That means, even if the UK gets the best FTA of all, it is still going to be only marginally better than the second best. Warning shots have already been fired across the bow of the EU. 

In leaving the EEA (a deep and special partnership) the UK is moving into uncharted waters of negotiating an FTA that can never be as good. One where UK interests could very well be cannibalised. This is what makes retaining EEA membership a no brainer - not least because it is governed by different set of rules where WTO principles do not apply in quite the same way.

From an idealistic perspective, I totally understand leavers who prefer a Canada style FTA. It's the one mode of exit short of no deal that really honours the referendum as is understood by most who campaigned for Brexit. But let's head down real street.

It is conceivable we could cook up an FTA and even one that includes market particpation rights for airlines and services. It would avoid a calamity but would still be a huge hit to trade we would struggle to compensate for. Having left the single market, over the following years we would seek to rebuild a lot of the lost trade we threw away - and in so doing would end up like Switzerland, gradually ceding sovereignty on EU terms under jurisdiction of the ECJ.

One way or another we are going to have to respect EU conditions of market entry and the effects of that will be extensive. So really what we want is a means of adopting rules with a proper means of veto and adequate safeguards. That's Efta+EEA. The only other way to enjoy the same market participation is full adoption of the EU acquis, subject to the jurisdiction of the ECJ without any representation. This is the worst of all possible worlds.

What's important is not the extent of alignment, rather the shape and scope of those institutions and bodies formed for the administration of any future relationship. They must be independent, not the ECJ. This is why EEA-Efta is the obvious choice. Independent tried and tested frameworks.

This prompts Brexiters to argue that our ability to strike "trade deals" will be restricted. That much is true if you think only in terms of FTAs and deregulation as your means of liberalisation. There are problems with this approach. Relaxation of standards would have ramifications for the EUs risk profile of the UK leading to a higher frequency of inspections with all the costs and delays that go with it. Though the EU nominally opens its borders to competition there are any number of means for it to protect domestic producers.

One high profile example of this is EU inspections for Citrus Black Spot. Typically reports cite "EU regulations". It isn't that. It's an EFSA risk assessment leading to increased inspections. Delays causing South Africa to voluntarily terminate trade even though it meets the standards and qualifies for trade preferences.

Again on these such issues we find the EUs risk assessment is a means of creating barriers. The basis of the risk assessment being scientifically questionable and likely the result of internal protectionist lobbying. This is where the UK, retaking its own vote on global bodies can have an impact. The issue was referred to IPPC secretariat to establish an expert committee which will rule on whether the EU risk assessment is justified.

Moreover, our policy within the many global forums is crucial. The bottom feeders at the FT keep dribbling out tired mantras about "The Brussels Effect" but when it comes to the mechanics of trade it's the global standards that matter. Both parties in FTAs work toward aligning on OIE/Codex/IPPC. The EU-Japan economic partnership agreement re-announced yesterday is no different.

As we have discussed previously all modern EU FTAs are largely an affirmation of commitments under the WTO TBT agreement. Out of interest, it would be good to know why they go to the trouble. Having scoured several EU FTAs I notice massive duplication of WTO TBT tract. You could quite easily delete whole chapters of EU agreements without it making the slightest difference. 

The truth is that there are no grand gestures or shortcuts to trade liberalisation. There is no magic bullet to unlock trade. The sweeping unilateral gestures as preferred by the libertarian right are suicidal. Achievements in trade are incremental and the result of thousands of hours of backroom work over increasingly arcane aspects of standards and regulations. Moreover, nothing happens without considerable investment - not least to win backing of new multilateral initiatives.

Even if we do stay in the single market, maintaining the EEA acquis, we still have a lot of new scope in terms of how we interact globally - and the UK is not without allies in a number of standards bodies - who are not best pleased with EU anti-competitive practices. Our strategy should be to seek out and build sectoral alliances through Economic Partnership Agreements.

That requires considerable investment to increase and enhance the participation of LDCs ensuring that they can meet market entry conditions. We then strengthen the global rules based system while seeking to stack the deck in our favour.

The thing is about EPAs, however, is they are only as good as the scientific, technical and material resources your throw at them. That's why we need DfID to grow up and stop playing White Saviour Barbie. It must learn that if it is to exist at all then it is to promote the direct national interest. That means no more spending on UN gender equality window dressing and more spending on trade facilitation. We need to get hardass and lose the virtue signalling.

If we stay in the single market via Efta then we stay in the top ten economies and we stand a better chance of playing the EU at it own game - not least since the EU will be short of a net contributor. From there we can use any number of means to navigate the complexities of the system to grant access to the single market whether the EU likes it or not. It will be a soft trade war. And not before time.

It's actually about time that the EU was exposed for the fortress of bureaucracy it is. It talks about FTAs and reducing tariffs while using every means such as ROO and EFSA to stop competition. We can subvert this quite easily without breaking EU/WTO rules. Though the EU does have clout, the one thing the Northern Ireland issue shows us is that it does not have agility or flexibility. That is its greatest weakness and if we are savvy about it we can run rings around them.

Increments in trade will most likely come from new trade facilitation measures. Small but significant measures to increase profitability of existing value chains - not big headline EU deals. The EU will spend year upon year bogged down in talks to produce FTAs which only notionally add value, but the more they have the less they can afford to usefully service them. The UK does not have that problem. We can use our aid budget to finance them entirely legitimately.

The lazy mantra that the UK becomes a passive rule taker is largely gaslighting from remainers whose horizons extend no further than Brussels - most commonly people who have never bothered to read an EU FTA. With every FTA the EU signs it further reinforces the dominance of global standards and international forums. 

We also note that the buzzword in trade right now is Blockchain. The blockchain aspect is really just the technological platform but the methodology of Single Window is what should concern us. It is revolutionary. There is only so much we can do by tinkering with tariffs and standards. The big gains are to be made in customs cooperation, where again we find UNECE and ISO spearheading advancements. The frameworks are also crucial. Again we find in the EU-Japan agreement the WCO takes primacy. 

I was also completely unsurprised to find this tract:

Being that the UK is a first world economy and a scientific technological leader at the forefront of a number of industries, we are very often the first movers on a number of standards and BSI is a global standards powerhouse. Even if it were the case that that EEA members were "sitting by the fax machine" for EU regulations (which they aren't), the standards therein are not the exclusive domain of the EU. We are not helpless. 

Nobody should underestimate the scale of the challenge Brexit presents nor should we expect an easy ride of it. The EU will fiercely defend its own interests and it will seek to frustrate an independent UK trade policy. But we should also note that as the global rules based system matures the EU won't always get its own way and the leverage the UK can wield, along with Efta and those other states who may follow Britain's lead, means that there will be give and take between the UK and EU. It will vary according to the sector and the platform. With guile and patience we can still shape the rules of the game - possibly even to greater effect. 

For me the case for staying in the EEA has never been stronger. There are plenty of good reasons to leave the EU but deregulation is not one of them. There is, however, every advantage in being an independent actor in trade forums as a distinct customs entity - and from a sovereignty perspective, in the modern context, having the ability to say no matters more now than it ever did. The EU offers us no such protection and can railroad us into adopting job killing standards for entirely political reasons. 

Brexit will require that we think differently about trade, and it requires that we take off the Brussels blinkers and learn to think globally. There are a number of approaches and dozens of mechanisms other than FTAs to enhance and improve our trade. There is far more to trade than tinkering with tariffs and and there is still much to do. Measures to tackle counterfeiting and fraud between key trading partners can have substantially more impact than an agreement on tariffs. This all depends on a network of interagency cooperation where we would be foolish to turn our backs on the EU.

Whichever way it goes, the UK will be committed to spending considerable sums on cooperation. Brexit means we repatriate a lot of the spending decisions but the one thing we cannot afford to do is is neglect our participation on the world stage. The opportunities are there but we must be active players and we must be prepared to invest. 

If the UK leaves the single market, thereby voluntarily relinquishing substantial sources of income, we cannot expect to play high stakes games in the same league. Likely it will take decades to  recover lost influence and trade - if we recover it at all. Leaving the EEA most likely means becoming the supplicant of the EU that many,incorrectly, say Norway is. 

Taking our place in Efta means that we remain part of the European trade ecosystem but it formalises the natural drift between the UK and Eurozone EU and empowers both tiers to configure their interests accordingly. The EU is then free to further integrate while the UK can cast a wider net. It is a more harmonious configuration for Europe and beneficial for both. Neither is served by permanently weakening the UK. Leaving the EEA would be an unforced error - and a sledgehammer to miss the nut.