Wednesday, 20 June 2018

Rees-Mogg: delusional conman

People are right to observe that the EU does flex its own rules but very often when it does it is invoking emergency measures or articles inside a particular legal framework. That, though, cannot extend to Brexit.

When the UK leaves it will become a third country. Standard third country treatment will apply. That new relationship could evolve to include further customs cooperation but it would have to be part of a formal agreement.

What the EU is not going to do is enter any agreement that compromises its own legal order. Any agreement allowing the free(ish) movement of goods would mean that any UK regulatory divergence would have to be supervised and mutually agreed.

It is not, as Rees-Mogg suggests, able to recognise UK standards and regulations if there is no coordination between the EU and the UK. To do so would allow the UK to unilaterally set the minimum standard for goods to enter the market.

To put that in more familiar terms, the EU will protect its own sovereignty and police its own frontiers in accordance with international law and EU treaty law. Any exemption granted to the UK would have to be replicated throughout and extended to all third countries.

No matter how much Rees-Mogg twists and distorts his reading of WTO law, the fundamental principles will be observed. His mindless disciples may be convinced but his assertions do not withstand exposure to the real world.

In the case of a no deal Brexit the situation becomes worse in that there would be no formal relations with the EU since all of our trade relations are tied up in the treaties. No deal means that you do not have a deal, treaty, accord, or whatever you want to call it.

The EU must, therefore, treat the NI border as its own frontier and police it accordingly and our proximity and former member status has no bearing on how it must police its frontier. It would be like the UK was a new country having dropped out of the sky.

We would, therefore, have no formal recognition of qualifications which allow officials and inspectors to operate. Similarly with drivers, clinicians and pilots. Not ability to authorise goods for circulation in the market and no flight permissions.

So it wouldn't matter if tariffs kicked in or not. We would have considerably bigger problems. And that is the problem with Rees-Mogg. He simply isn't capable of acknowledging that anything beyond tariffs exists.

Even if we could in the immediate aftermath secure an agreement on tariffs, if exporters face customs obstacles and all the overheads therein, the overheads would be substantially more than whatever a tariff would have cost.

But the point lost on JRM and the media and politics as a whole is that it's not just a no deal Brexit that causes this chaos. Even with a withdrawal agreement, if we leave the EEA then we still become a third country with only limited formal relations.

The easy bit will be securing a deal on tariffs, but on regulatory cooperation we cannot have anything comprehensive like EEA. The EU makes agreements on mutual recognition of conformity assessment NOT on standards. There is no mutual equivalence on product standards. In the absence of a harmonised standard, third countries have to obey the laws applying in the country of arrival and/or destination (or both). Overnight we find business having to find named importers and having to re-certify.

So if we do manage to secure a withdrawal agreement and negotiate an FTA we are STILL facing multiple cliff edges. Predominantly this will affect food, aerospace, fisheries, automotive and anything else heavily dependent on single market certification.

The only way to avoid a jobs catastrophe is to remain in the EEA. Trade deals with the rest of the world will not compensate for the loss. Commonwealth countries tend to have small populations and low incomes with no high tech industry to supply.

Even if we did, by some miracle, secure a comprehensive deal with the US (highly unlikely) it will not compensate even with services provisions. Rees-Mogg's idea of tinkering with tariffs on shoes and imported lamb can't replace the high skill jobs that will bleed away.

It seems I end up writing a variant of this post at least twice a week, but I will go on saying it for as long as it takes to sink in. There are no trade advantages whatsoever to leaving the single market. Not even in services.

Were we to retain the EEA then we would still be at liberty to enter our own FTAs as Norway does, without losing vital EU trade, and though there may be some restraints on how we can diverge and deregulate there is little economic utility in doing so.

Moreover, the EU will have a regulatory gravity that will mean in any scenario our laws are likely to be influenced by the EU and corporates will prefer to work to the EU standard simply to maintain compatibility with their EU based operations.

Re-equipping and training for new regulatory regimes is expensive and time consuming, but unlike last time the net result would be less market participation, and a great deal of confusion and uncertainty.

I have no problems with leaving the political union of the EU and will be very glad when it is done. There is not, however, a convincing argument for turning our backs on our nearest markets. Jacob Rees-Mogg is a conman and a delusional one at that.

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