Wednesday, 20 December 2017

The fudge won't last forever

One of the things which guarantees that phase 2 of the Brexit talks will be even harder than phase 1 is the continuing failure of the Brexiteers to face up to the simple reality that their determination to scrap EU rules is what guarantees the imposition of a hard border somewhere, the only question being where.  This blog post sums up very simply the factors that lead to the requirement for a hard border, noting that:
There are essentially 3 reasons why customs borders exist:
1.    To impose tariffs and quotas;
2.    To confirm the imports’ countries of origin;
3.    To ensure compliance with regulations and standards.

A free trade agreement with the EU would only get us over the first of these. To avoid the second would require continued membership of the EU Customs Union (or the negotiation of something similar). To avoid the third we would need to stay in the European Economic Area and abide by the rules of the single market.
Whether because they don’t understand that very simple explanation, or because they’re being deliberately dishonest, the Brexiteers continue to insist that the EU27 will allow the free movement of goods and services across its boundaries from a country which no longer follows the same regulatory regime.  In their dreams, they fondly believe that they can scrap employees’ rights (such as the Working Time Directive), reduce environmental controls, scrap any EU rules that they don’t like, hand UK companies, as a result, a trading advantage in that they can produce goods and services with fewer constraints, and that the EU27 will simply allow a lower-regulation country to undercut their own companies on price.  Why?  Well, because they need us more than we need them, obviously.  And because the UK is very, very special.
Calling those who question the logic of all this traitors who are undermining the glorious charge into certain defeat may make them feel better, but it doesn’t alter the underlying logic, which is, at its simplest, that there is no way in which the EU27 are deliberately going to put their own businesses at a competitive disadvantage.  And that means, at its very simplest, that regulatory divergence mandates border controls.
The Brexit secretary talks blithely about Canada plus, plus, plus.  But Whilst the Canada agreement removes almost all tariffs and quotas, it does not do away with the need for customs controls for the other two reasons.  And as the EU’s website makes clear, “All imports from Canada have to meet EU rules and regulations on technical standards, consumer safety, environmental protection, animal or plant health and food safety (including rules on GMO's).”.  The goods sold by Canada to third parties (or in their own internal market) do not need to meet EU standards, but those sold to the EU do.  How many companies selling into the EU market from Canada will really decide to produce their products to two different regulatory regimes – that of the EU and that of Canada itself?  My guess is very few; most businesses will attempt to produce their products to a set of standards which meets the requirements of both regulatory regimes.  Exactly the same would be true for the UK.
It doesn’t matter how many pluses Davis adds to the word Canada, UK companies selling into the EU market will still need to meet all EU standards, as well as any different ones set by the UK government, and will therefore, in effect, see an increase, not a decrease, in regulatory requirements.  It is only those UK companies which either do not export at all, or which only export to less-regulated markets than the EU that will see any ‘benefit’ from regulatory divergence.  And that’s a rather smaller subset of the UK economy than the Brexiteers would have us believe.  And of course, as soon as the UK’s standards diverge, there would need to be border checks to ensure that only goods meeting EU standards and covered by the free trade agreement were crossing.  That in turn means that there is a basic, fundamental contradiction between the desire for regulatory divergence and the commitment to avoid a hard border across Ireland.
It’s a contradiction which they show no sign of even understanding let alone getting to grips with.  Some of them seem seriously to believe that the Irish Republic will shortly see the error of its ways, recognise the folly of independence, and beg to re-join Wales and Scotland under benign English dominance.  Others positively relish the thought of returning to what they see as the past glories of an island nation standing alone, based on a view of history which owes as little to fact as the case that they made for Brexit itself. 
(As an aside, every time they use the word ‘buccaneering spirit’ I find myself wondering if they really understand what the word means.  There may be a certain romanticism to murder, pillage and piracy – and licensed pirates are what buccaneers were – but trying to take whatever we want by force, deceit, and trickery doesn’t look like a particularly promising future for a middle-ranking European country in the 21st century.)
I’ve argued before that the Brexiteers’ position makes little sense if Brexit is seen in isolation; it makes sense only as the first move in destroying the single market and the EU with it.  In that sense, their view of European diplomacy and the UK’s objectives in it have changed little over two centuries – sow division and make sure that no other country can achieve dominance.  The future is essentially unknowable, and they may even be proved right in time.  I have to say, though, that the evidence to date is not very supportive of that outcome.  So far they’ve managed to build more unity in the EU than we’ve ever seen before, and what they’ve sown in European minds to date looks more like bewilderment than division to me.


Jonathan said...

At what point, I wonder, does one say that "Yes, we have got the number of these Brexiteers. We understand what makes them tick and where they are going."
I think you've put your finger on it, in mentioning "buccaneering spirit". I can see the appeal of this. It is a rejection of the decadent etiolated state of the UK at the true end of its Age of Empire, which many feel in their bones. It is an invocation of animal spirits (as the Americans say). The Brexit people want vigour, drama and adventure. They want to fly a Lancaster or land in Normandy or - more vaguely - go back to the 18th Century when you could carve out fortunes in the West Indies or Bengal. A more masculine age. All fantasy of course, when the reality was brutal, as you say. Our world has become more consensual and - yes - feminised. In the context of Europe, swapping the folly, aggression and evil of the Nazis for the close cooperation of the EU27 (should be EU28) has surely been something desirable and real. Whereas if the Brexiteers carry on to the end they will send their England over a cliff and Wales with it.
OK we've identified the problem.
Surely we can now be confident enough that we can do something about this. Brexit is not inevitable. As we move into 2018 can we start working on how we are going to organise ourselves, protect Wales and probably scotch Brexit into the bargain?

Sprit of BME said...

Can I make a point on this ever-ending saga of treaty negotiations with the Fourth Reich (EU), that the way HMG has been forced to conduct themselves in their relationship with Westminster, is going to produce an outcome which will be a disaster of the first water. Members are mostly against the outcome of the referendum and are still trying to come to terms with why the great unwashed came out and voted to leave, although the political elite had worked so hard over the years to hand them things that they believed they wanted – the total ingrates!!!
Westminster has called for this treaty to be answerable to them, line by line, compared to what was the age-old and tried and tested practice of talks being carried out by specialists under the royal prerogative. So, it came as some surprise to me that last week an even more important treaty was signed by Mrs May without a whimper or a sound from the august body, who did not enquire what was in it or what was its implications
I speak of the Mutual Defence Treaty with Poland, which attracted about fifteen seconds of news coverage on state TV, but we know that a past Treaty triggered horrendous consequences of millions of deaths and financial devastation, part of which we are still paying for.
It must be the case that being grief stricken by the result of the referendum, members have not acted on any high moral calling for greater accountability, but have separated out this trade agreement in order to workout their grief, because the vast majority of them have no experience or knowledge of the subject matter and bring nothing to the table.