Monday, 25 June 2018

Time to get real.

The outcome of Brexit, assuming we can get as far as a withdrawal agreement without unleashing Ragnarok, will depend on whether the UK is capable of absorbing a few basic facts.

Theresa May will have a stack of letters on her desk from most of the multinationals operating in the UK and they will all be saying much the same thing - they need continued participation in EU regulatory systems if they are to continue investing in the UK.

Upon which depends a number of secondary and tertiary industries where we'd be looking at shedding over a million jobs as a starter for ten. How May responds to this depends entirely on what sort of poison she's being fed by her closest advisers - and who is informing them.

At last examination May still thinks we can leave the single market but opt in to various single market systems. Various think tanks with some influence are telling May this is possible when it isn't - and the EU has already made its guiding principles quite clear.

Since this has not yet sunk in with Number Ten - and the details can be shunted into the transition period we probably won't get a clear idea of where this goes until after we have formally left the EU. May will have to be told no to her face and then go and have a rethink.

Meanwhile the Brexit chatterati are churning over the possibility of an association agreement. I'm not convinced as it's just an FTA with some added dangly bits none of which will go as far as inclusion in EU regulatory systems and will not give observer status in EU agencies.

To get anywhere close to adequate we would need to include the Swiss arrangement for food safety controls (with direct ECJ applicability) but we also need a comprehensive agreement on everything from fisheries to aviation - probably consisting of shallow bilaterals.

The reason being is that the EU is not about to recreate the single market for the sole benefit of the UK and if the UK has decided it wants none of the obligations then it will get none of the rights. We'll maybe get some enhanced market participation but only on EU terms.

It will take some time for our idiot media to process this but at that point major UK employers will be screaming from the rooftops or will already have made their decision to bail on the UK. It won't be an overnight event - rather it will be a gradual deflation of operations.

There is, therefore, still plenty of time in which to push for the EEA. The EU can't go far beyond a basic FTA and there is no way to reinvent the EEA wheel without the EU putting its foot down and telling us yet again that there is no cherrypicking.

It can flex on some things and bend the rules and come up with fudges but it will not compromise on its overarching system integrity and will only flex in those instances where it has political obligations such as the NI border. The message is clear.

The short of it is that nothing short of the EEA is adequate for the breadth of issues our future relationship must cover and you cant have single market participation without being in it. No amount of guesswork and theorising from London think tanks changes that.

So anybody who is serious about Brexit and getting the best deal possible needs to face up to this reality and work to ensure that when the crunch comes that Theresa May is boxed in by reality.

If you're a Brexiter the time to quit the tedious trench warfare of re-fighting the referendum is now. The Brexit blob may insist that the EEA is bad but every alternative they set out stands on a foundation of intellectual sand. Their cupboard is bare.

This is why the pro-Brexit thinks tanks and their juvenile staffers have retreated to mouthing platitudes. They're trying to hold the line against the weight of argument that favours the EEA Efta option and when it comes to the meatier arguments they've got nothing to run on.

Their doctrines are based on free market philosophy - which they interpret as a race to the bottom in terms of regulation and taxation to make us competitive. What they don't understand is the ways in which the EU and other will lawfully retaliate.

Even without the UK the EU is still a trade superpower and it is not going to tolerate a tax haven of its coast and it is going to ensure that if the UK drops the regulatory standard for market entry it puts the UK in a quarantine.

We can see how this works in practice. Trump is playing the bully boy, attempting to back door the WTO but it's spectacularly backfiring and isolating America. If it won't work the US then it won't work for this rainy little island either.

Economic doctrines are fine as a guiding philosophy but they have to be informed by reality and that's the bit the Tory Brexit blob has problems with. They can convince themselves of anything but they are in for a big shock. The world doesn't work the way they think it does.

The truth they must embrace is that Brexit doesn't make the EU go away and we need a comprehensive relationship with it and there's no scenario where our closest neighbour will not influence UK trade policy and technical governance. You don't have to like it, but there it is.

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