Hammond: “A realistic negotiating position”
The FT reports that Chancellor Philip Hammond, speaking at the G20 meeting, has said that the UK must “adopt a realistic negotiating position” with the EU. So far, so sensible. No one should enter negotiations with an unrealistic negotiating position. But reading between the lines, it looks as though Hammond is running up the white flag. Clearly he feels that we can’t retain “access to the Single Market” (see below) unless we accept most of the trammels of EU membership. He doesn’t spell it out, but sceptics will fear that he’s prepared to accept free movement, EU budget contributions and acceptance of EU Directives and Regulations as part of the deal.
What he should do is to invoke Article 50, and then invite Brussels to discuss what it needs to do to retain tariff-free access to the UK market. Show some back-bone, Philip!
The Single Market
We are constantly hearing Ministers and business leaders insisting on the importance of “access to the Single Market” (though to be fair to Philip Hammond, he’s also on record as insisting that we must leave the single market – it’s not clear whether he meant “This is policy”, or “This is the damage that Brexit has done”). It’s become a mantra, almost an article of faith, for many in the debate. It’s also, perhaps deliberately, a massive ambiguity. So let’s try to deconstruct it.
The EU’s Single Market is an old-fashioned Customs Union, overlaid by massive and damaging levels of regulation and bureaucracy. The conventional wisdom is that it makes trade within the Single Market much easier – though there are exporters who say that exporting to the rest of the world involves less hassle than exporting within the EU. But it’s the concept of “access” that embodies the ambiguity.
All trading nations have access to the Single Market: The plain fact is that all trading nations have access to the Single Market. All that varies is the terms of trade. The three biggest suppliers of goods into the Single Market are the USA, Russia and China. They are not members of the EU. They currently have no preferential trade terms with the EU. They are simply third-party, arm’s length suppliers – yet they are hugely successful. Britain would also trade successfully with the EU if we were in the same position after Brexit – and that is absolutely the worst case we can envisage. All likely outcomes are better.
Many countries have bilateral Free Trade Deals with the EU: Several dozen countries have established Free Trade Agreements with the EU (I always think of South Korea as my prime example, as I spent a number of years running businesses there). These countries also have “access to the Single Market”, but on tariff-free terms.
A few countries have quasi-membership terms: A few countries, notably Switzerland and Norway, have quasi-membership terms with the EU, giving them tariff-free market access but subjecting them to budget contributions, EU regulations and free movement. Yet these few examples were constantly quoted by the Remain side in the referendum – because they are so obviously a bad deal.
28 countries are EU members: 28 countries including the UK are currently EU members (with more, including Turkey, queuing up to join). These have full tariff-free market access – but are subject in full to all the negatives of EU membership.
We have just voted against the fourth option – membership. Clearly we don’t want the Swiss/Norwegian option, which is the worst of both worlds. We could well live with the first option (the tariffs we would pay on exports to the EU would be less than half our net budget contributions). Ideally we should press for the second option – a straightforward free trade deal. And there are increasing signs that we could get such a deal. The phrase we keep hearing from our continental partners is “a mutually beneficial relationship”. Since an FTA offers mutual benefits, that seems the most likely option.
But above all we must not be hoodwinked into accepting free movement or EU budget contributions as a price for “access to the Single Market”, which we will have anyway.
Theresa May visits Northern Ireland to discuss borders: There is a genuine issue with regard to the border between Northern Ireland and the Irish Republic. No one wants to see border controls or customs posts being reinstated. It is worth noting that Option Two above (total independence for the UK, plus a UK/EU free trade deal) would eliminate the need for customs posts on the border.
Anger at EU deal to halt Brexit
Meantime both the Express and the Guardian report a possible deal being cooked up in Brussels to offer the UK a seven-year “emergency brake” on immigration, with the implication that on that basis we should remain EU members. Worryingly, the Express describes this proposal as “Merkel, Hollande and May’s plan to keep Britain in the EU”.
This might have been a sensible negotiating offer from the EU when David Cameron was seeking his “renegotiation”. Perhaps they now realise that their stonewalling was counter-productive, and led directly to the Brexit vote. But the Brussels plan would leave Britain, after seven years, still locked in to the dysfunctional EU, and no better off than today. It absolutely is not Brexit, and nothing like it.
Theresa May has emphatically stated that “Brexit means Brexit”. Sadly, she hasn’t quite clarified what she does mean by the word – but it can’t be simply a minor concession on free movement. Let’s be clear. We want to be an independent, democratic global trading nation, able to make our own laws, our own trade deals, to control our own borders, and to be subject only to rules made in Westminster, not rules made in Brussels. Far from being “a leap in the dark”, this is in fact the status of most countries, most of the time. Not so much a leap into oblivion as a return to normality.
Terror in Germany
Following the recent incident in which a Syrian refugee blew himself up at Ansbach near Nuremburg, Angela Merkel has faced criticism for her slow reaction to terrorist events in Germany – and also, by implication, for her open-door refugee policy. But there is no room forschadenfreude or complacency. We are all at risk, and vigilance must be the order of the day.
US cools to TTIP without the UK
Many in the UK have deep reservations about the proposed TTIP deal between the EU and the USA, and some of the proposed provisions of the deal would have been unacceptable. Nonetheless it is interesting that the Express reports reduced US interest in the deal after the Brexit vote. It quotes a US source saying “The EU without the UK is like the USA without California”. The EU’s chief negotiator has even been led to suggest (presumably through gritted teeth) that the post-Brexit UK might be invited to participate in the deal despite having left the EU. Whether we’d want to accept is another matter. I personally believe that the UK stands a good chance of getting its own UK/US trade deal, on terms that suit us, not Brussels, rather more quickly than the EU will get TTIP.
Erasmus under threat?
The Telegraph reports claims from academia that “British students could be excluded from the Erasmus student exchange programme” after Brexit (remember that academia was united against Brexit, imagining that the grant funding from Brussels would not be replaced in the UK). They fail to mention that several non-EU countries (like Iceland) participate in Erasmus. Other countries including Albania, Algeria, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Egypt, Georgia, Israel, Jordan, Kosovo, Lebanon, Libya, Moldova, Montenegro, Morocco, Palestine, Russia, Serbia, Syria, Switzerland, Tunisia and Ukraine are also able to take part on a limited basis. Given that the UK has some of the best universities in the world, and that many thousands of EU students come to the UK, it is inconceivable that a post-Brexit Britain would not be involved.
The Express features an Amnesty International report citing the appalling treatment by the Turkish authorities of Turkish soldiers alleged to have been implicated in the recent coup attempt. Please read, and consider whether Turkey is a suitable candidate for EU membership, and whether it is committed to “European values”.
Guardian makes a record loss
The Guardian, that leading organ of the liberal left, and serial denigrator of our country (I believe it is also the preferred personnel advertising medium of the BBC) has just declared a record loss of £173 million. Of course we are all in favour of a free press and diverse media – but if it comes to it, I suspect that The Guardian would not be much missed.