Don’t be taken in by the Brexit models being peddled by those backing the Lords’ amendments
David Campbell Bannerman MEP
I had a teacher at school who played rugby for England. Once. He dropped the ball on the line and a certain try was lost. It was a national humiliation.
Now I fear we are about to do exactly the same this week regarding our future relationship with the EU and the votes to overturn the Lords amendments: drop the ball on the line – if not crazily kick it into touch.
Not the Government – which has the right policy after many well balanced Prime Ministerial speeches. It’s our own Parliament, the Europhile Lords, rebel Conservative MPs and the Labour Opposition (a recent poll shows only 15% people understand their position) – backed by a whole coterie of loud, self-appointed trade experts including certain MPs, MEPs, academics and writers, who threaten a great result.
Forgive my frustration and uncharacteristic bluntness here, but the stakes for our nation’s future global opportunities and economic success are stratospheric. My recommendation is born out of 15 years studying options outside the EU and nearly 10 on the European Parliament’s International Trade Committee working on EU trade deals. I know enough to realise I don’t know it all, but like a good whisky the best final results require years of distillation.
And my conclusion? We actually have the right result already, we just don’t know it.
Look, the EU is now offering us the best and biggest trade deal the EU has ever done – 100% tariff/quota free, plus services. This is essentially ‘CETA++’- or as I call it ‘SuperCanada’- going much further and deeper than Canada’s CETA deal. That CETA deal is the EU’s ‘gold standard’ now. But when I go round speaking about this, everyone asks: why don’t we know this?
On 7th March, after meeting our Prime Minister, EU Council President Donald Tusk stated:
“I propose that we aim for a trade agreement covering all sectors and with zero tariffs on goods [CETA is 99% tariffs removed; only 92% in farming, so a +]. Like other free trade agreements, it should address services [second +].”
Mr Barnier meanwhile accepts our red lines: no Customs Union, no Single Market, no ECJ.
OK, we need to negotiate for deeper services, to add in more financial services and broadcasting as Theresa May requested (a third +) during the transition negotiations, but we have the makings of a fine deal now – congratulations then to May and David Davis.
So for Heaven’s sake, for Britain’s sake, for young and old people’s sake, please don’t let’s screw it up. Let’s not drop the ball on the tryline this week.
To aid the understanding of the Brexit options, including those sought through a number of the Lords amendments to the Withdrawal Bill, here is a simple ‘Idiot’s’ guide to the kind of half-baked solutions being bandied about: please don’t be taken in, and if anyone promotes them, tell them not to be ridiculous:
1) ‘The EFTA model’ (Idiocy level 8/10). For a start, EFTA is not a model, it is an organisation. EFTA negotiates trade agreements for its four members, who then sign those deals individually. But an ‘EFTA model’ doesn’t exist. The Swiss have a model and its other three members – Norway, Iceland and Liechtenstein – have the EEA (European Economic Area) model below. We could though have an EU free trade deal, and be an associate member of EFTA.
2) ‘The Swiss model’ (Idiocy level 8.5/10) is ridiculously complex, does not control borders and the EU will not give us one. The model has 120+ separate bilateral agreements, 20 main ones, and still manages to miss out two of the EU’s four freedoms, capital and services – and financial services in particular, which is why UBS and Credit Suisse are in London. But it keeps free movement, basically. The European Parliament’s Brexit negotiator, Guy Verhofstadt, last week called it “the Swiss catastrophe… with tens and tens of bilaterals”. He thought it might take 20 years to finalise. The EU does not even want the Swiss option for Switzerland! They’re doing everything possible to end it. So it’s a non-starter.
3) ‘The EEA option’ (Idiocy level 9/10) allows the EU to retain control of Single Market laws over 100% of the UK economy – the fifth largest in the world – despite only 12% of our economy being EU exports. It would do this without any British MEPs, Council or Commission officials to stop it. The three EFTA countries do not have our economy’s width; Norway is only big in oil, fish, defence; Iceland in fish, energy and aluminium; and in Liechtenstein, finance. So, hypothetically, the EU could decide to harmonise all EEA car production by insisting all cars made are left-hand drive – overriding Malta and Ireland. We would have no say or vote in the process. All UK cars would then have to be left hand drive. Taking back control?
Nor is there any border control as free movement is non-negotiable – a major referendum issue. The Single Market itself may sound cuddly, but even the EU estimates its costs are twice its benefits – and we’d be at mercy of unhindered red tape and intervention masquerading as market measures. David Cameron and The Guardian both concluded during the referendum it was idiotic, summarising the Norway option as: ‘No say. Still pay. No way!’. The campaign group Nei Til EU which won Norway’s referendum now campaigns for a free trade deal, not the EEA.
Whilst I toyed with ‘EEA Lite’ – (EEA minus free movement, cash payments, out of the Single Market and ECJ ) – the game has changed markedly and a free trade deal has become the simplest and cleanest way forward, particularly as the EU is obsessed with maintaining Single Market purity.
4) A New Customs Partnership (Idiocy level 9/10) is Byzantine, and costly for business, whilst destroying our ability to do our own global trade agreements by default. It will not be an attractive proposition for any other nation to do half deals with us without reducing goods tariffs. The word ‘partnership’ means ‘union’ – as in ‘civil partnership’. Fortunately this proposal is being dropped.
5) Staying in ‘a’ Customs Union (Idiocy level 10/10). This is supremely stupid as we are already being offered the main advantage of a Customs Union now – 100% tariff free and quota free access – through that CETA++/SuperCanada deal, but without the considerable downsides. One downside is we can’t do our own trade deals. So Britain, that created a trading empire equal to one quarter of the world’s surface, is currently reduced to ‘taking notes’ with no voice whilst the protectionist EU negotiates on our behalf at the World Trade Organisation (WTO).
Now we have a chance to lead the WTO – given that of the G7 economies, the USA, China, India, Japan and the EU are basically protectionist. Don’t be fooled by claims Trump’s steel tariffs mean we will not get a US trade deal. The UK has a 2 cents surplus with the USA for every $1 traded, Canada a deficit of 2 cents, but China has a 50 cent+ deficit. Trump is happy to do deals with those in trade balance with the USA.
Totally unhelpful is the sectionable idiocy of business organisations like the CBI and IOD (I’m a member), which should be the champions of Global Britain, but instead are rooted to the failing EU Customs Union, despite the reality that the IMF estimate 90% of economic growth in the world in the next 10-15 years will come from outside the EU. Indeed, the EU’s share of world GDP since we joined the EEC Customs Union has fallen from 36% to under 20%. Well, the CBI backed nationalisation in the 1940s, high taxes in the 1970s and the euro in the 1990s, whilst the IOD originally argued strongly against the (Turkish) Customs Union option they now support.
I was at a presentation at the Port of Rotterdam a fortnight ago and they proudly showed they are the largest port in Europe, twice Antwerp, well ahead of London. But they are only ninth in the world and say Asia will have all 15 top world ports shortly. This is a reflection of where international trade is going.
There is another big downside – nearly 20,000 tariffs. How can the Labour Party, which claims to represent the poor, support 19,753 separate taxes on the poor called tariffs? This is ‘Corn Laws Mark 2’ where Jeremy Corbyn is on the side of capitalism and protectionism, and the Conservatives the poor downtrodden working class consumer. Why keep a 104% tariff on granulated sugar, 70% on (unchlorinated) chicken breasts, 50% on New Zealand lamb, 24% on canned tuna, 12% on men’s T-shirts and women’s dresses, 10% on cars, even 30% on bread? These taxes/tariffs drive up the poor’s cost of living. There are even EU tariffs on food bank items such as breakfast cereal (39.3%) and squash (38.6%). Hypocrisy!
So we come back to the standard free trade agreement approach or we look at WTO rules.
There is more ‘Project Fear’ idiocy here. The HMRC quote that ‘Maximum Facilitation’ (MaxFac) technology supporting a trade deal would cost £20 billion has been found to be as reliable as Diane Abbott’s figurework: IEA analysis finds it is it was a quarter of that and top businessman John Mills and Dr Graham Grudgin put it at one tenth – just £2 billion. So MaxFac does work alongside a free trade deal.
And don’t give me Northern Ireland borders: I was a government Special Adviser during the peace process. A solution has already been found by the EU’s own adviser, Lars Karlsson, who was a World Customs Organisation director. I have myself written two papers on this (see my website), the latter with ex-boss of the British Chambers of Commerce, John Longworth, and former Northern Ireland Secretary, Owen Paterson.
It is shameful to use the Irish people, North and South, as pawns in the EU’s bigger game of keeping the UK bound to EU regulations – because, as the BBC’s Katya Adler revealed, the EU is “terrified” of a “super competitive” country like UK on its border.
If I may, I would propose three proposed steps to the Government:
1) Accelerate WTO rules ‘no deal’ planning – I have private reassurances the Government is working on WTO contingencies, and is advanced in certain areas. But if the Port of Rotterdam is actively hiring up to 900 customs officers and establishing new lorry parks, just in case, and Guy Verhofstadt confirms the EU is also preparing for WTO, we must bring forward our spending plans. But we can continue to shape a SuperCanada deal.
2) Tell Tory rebels if they vote for these idiotic, damaging measures contrary to their manifesto commitments, such as for a Customs Union or the EEA, then the Government should pause the whole Bill, and announce it will go for the WTO rules ‘no deal’, which is automatic under Article 50 of the Lisbon Treaty, two years after it was triggered in March 2019 anyway if no deal is struck. The British Government merely needs to sit back, and watch the clock ticking. The amendments calling for a WTO deal to be agreed by Parliament would only be binding if the Withdrawal Bill gets through Parliament. So park the trade and economic relationship side in EU negotiations and carry on with a narrow customs deal (not Customs Union/Partnership), an aviation deal, security and the other vital cooperation which applies whether we obtain a trade deal or not.
3) In time for the October (not June) EU Council (and still allowing for approval by the time we leave), watch the EU panic, German industry and French/Irish farmers go spare, followed by a SuperCanada deal being thrown at us. Observe the EU pile pressure on UK rebels to back a free trade deal departure. They will score our try for us. At that point bring back the Withdrawal bill and pass it in late 2018.
So, please let’s just drop over the line to score, by seizing hold of this SuperCanada/CETA+++ trade deal and moving on it swiftly. The rest will certainly not be straightforward, but we’ll have far more time and room to play.
June 10th, 2018: BrexitCentral