Is Brexit a success? Test2020

There’s been recent Twitter/punditry hostility that goes something like this:
Remainers: Brexiteers cannot contemplate Brexit being bad for the UK
Brexiteers: Remainers will never accept that Brexit is a success

To break this deadlock, and hopefully as a useful tool both for 2020’s politicians and future historians, I thought it’d be really useful now to set out what we might expect ‘failure’ and ‘success’ to look like. As far as possible, this should be quantifiable either by macro data, yes/no truth claims (‘EU citizens have same residency rights as in 2015’) or overwhelming obviousness. And yes, of course I’m aware that there’s lots of noise for the macro measures. That doesn’t mean we shouldn’t try.

It is not that straightforward.

As a very public Remainer, it wouldn’t be fair for me alone to define these tests. All the Tests below come from prominent Leave campaigners, Vote Leave claims/promises/commitments, and ‘Change or Go’, the Business for Britain report.

Obviously this document is not of any value to those who say the theoretical freedom of Britain from its Brussels chains is all that matters. I kindly ask such people not to offer comment.

Otherwise, I invite Leavers, Remainers, statisticians, economists, constitutional lawyers and migrant rights lawyers, and anyone else interested, to help set what the parameters should be, when they should be tested, and offer other Tests.

 

Edited 9.7.2017 with more categories.

Good outcomes

(TEST at 2020 & 2025 UNLESS OTHERWISE NOTED)

MACRO
Pound does not crash below 1.15USD; 1.05EUR (unless other clearly unrelated shock)

No formal recession (unless other clear cause e.g. credit crisis, invasion, bubble) by 5 years after exit agreement comes into force (if exit agreement) or after we ‘walk away’ (if not)

Industries (City, construction, catering and hospitality, agriculture) content with supply of labour at appropriate skills

JOBS

Under 5% of workforces of auto manufacturing ‘exported’ out of UK between date of vote and i) publishing of final settlement, ii)2 years after agreement takes effect. [By hard definitions, the job losses would need to be explicitly associated with worse business conditions under Brexit according to senior company figure or press release]

Under 5% of workforces of City ‘exported’ out of UK between date of vote and i) publishing of final settlement, ii) 2 years after agreement takes effect [as above]

UK employment levels fine (below 9% unemployment), or indeed benefits from migration restrictions (assuming business demand is stable [unless business demand drops because of drop in demand associated with Brexit terms])

Real wages (no worse than 2010-2016 range; considerable improvement if we’re to believe some L claims eg Tate & Lyle)

real terms growth in wages of bottom 20% of earners above 2005 to 2017 average

inequality: reduction in earnings gap between top and bottom deciles of earners

GLOBAL

FTAs –
> talks underway by 2022 for X FTAs;
> Y FTAs in force by 2025;
> FTA tariff and access terms no worse than CETA; no use of ISDS;
>negotiation thereof more transparent than CETA/TTIP;
> FTAs must include some G20 nations)

FTA with the EU27 signed:
i) without WTO hiatus
ii) with headline tariffs, NTBs and service access (inc banking) no worse than CETA
iii) OR banking: better than Switzerland (as judged by industry spokespeople)

UK re/gains seats, votes on international bodies (UNECE, WTO, ISS, Basel, Codex, ILO etc) as predicted and (?) has notable moments of clear influence.

Mean FDI, both from EU27 and from RoW, falls within 1sd of 2005-2015 levels

WEF Global Competitiveness Report & World Bank, Ease of Doing Business, no drop below last decade’s range

FELLOWSHIP

Terror and crime data sharing continues

Rights of UK citizens in EU27 countries safeguarded (inc. Health, residence, employment rights, welfare rights, education)

Rights of EU citizens in UK safeguarded (as above, as in the British Futures promise)

NHS

– Waiting times no change or improve

– Reasonable growth in budget in line with GDP if not above

– No staffing shortages beyond current levels from migration restrictions (this applies too to construction, seasonal farming &c)

SOCIAL AND OTHER

End of Tampon Tax (VAT)

schools: no greater competition for places; improved teacher to student ratio; higher standards of written and spoken English GCSE

social housing availability improves, waiting lists no longer than mean 2010 to 2017. (Controlling for massive government building project a similar)

private house prices neither crash (drop 5% average value within one year) nor see prohibitive inflation (gaining value above 5% general inflation)

Scotland and Northern Ireland remain in the UK

UK fishermen have same area to fish;
stocks are stable or stronger;
no ‘cod wars’ with EU or EEA states

‘Nationl Cohesion’ or similar feeling does not suffer/no increased domestic animosity. BSAS, ONS stats on national wellbeing

Good by some pro-Brexit reckoning/ promise keeping

End of CJEU jurisdiction over UK government and UK courts (direct)

End of CJEU jurisdiction over UK government and UK courts (indirect)

End of jurisdiction of EU bodies setting standards such as EMA, ECB, Common Patents, REACH

UK Universities not facing shortfalls from i) lack of EU funds, ii) difficulty getting full-fee paying overseas students

Funds for UK agriculture mirrored by UK Gov for period promised

Funds for regions (social, coherence) mirrored for period promised

EU migration i) limited by clear, fair points-based system with noted impact on gross immigration
Coherent, operative plan for limiting EU27 migration, ii) put into effect with success comparable to that of current UKBI standards

End to payments into EU budget with net gain over £280m, or roadmap to same after divorce costs, those costs not being greater than expected budget payments until 2020 round

UK government borrowing & debt outlook no worse then 2016 spring forecasts )[1] [ie Andrea Leadsom right on predicting ‘no danger’ ]

No obvious energy buying/generation caused by Brexit consequence (e.g. pipeline connectivity)

No dislocation for Gibraltar beyond that experienced by mainland UK

Calais – current Le Tocqueville treaty perseveres, or stronger situation agreed. (ie no lapse, no open border on French side)

ROI-NI Border issue settled without uptick in violence in Ulster; Britain legitimately able to stop EU and non EU migrants entering Britain through ROI border if free movement no longer applies to Britian

Tourism levels do not drop below 2015-6 projections

Recorded race hate crime in UK, and/or violent crime against Europeans, does not rise +2SD above 2010-2015 levels.

UK bodies stay part of Horizon2020, paying roughly similar amount, UK scientists not discriminated against, collaborations continue

Sporting cooperation like EUFA, FIFA continues unabated

Hard to measure

Whitehall more accountable (?) and therefore more responsive (??)

Environmental red tape gone; but environment no worse (??)

Splitting WTO schedules with a view to non-EU quotas does not result in net loss of market access for UK exporters (Ungphakorn)

End to farming subsidies and defensive tariffs making staple foods cheaper? (IEA paper)
Developing world’s UK export situation consequently more fair?

Trading conditions with Cotonou Agreement countries no worse for former Commonwealth partners

Mutually agreed food safety standards maintained, and agreement over checking thereof

Stay in EURATOM or negotiate new mutually beneficial association (?)

No TTIP-esque (?) back door privatisation of NHS via new FTAs

Whitehall (i) able to change State Aid and Procurement rules, which (ii) can be used to help struggling but sustainable (or small but promising) UK businesses and/or prevent job losses and/or defend against predatory acquisitions

Less employment red tape (?) eg reform to WTD, TAWD, that don’t completely ruin worker rights but fix situation for eg junior doctors

Less other red tape (?)

Parliamentary sovereignty and true democracy –
Parliament makes decisions that it clearly would not have been able to under the EU, or these are at least seriously debated
‘Kick out bad rulers’… unpopular government and civil servants are ?fired faster?

Foreign Policy – UK takes its own distinct line on crises like Ukraine, Turkey, Arab Spring, distinct from (and superior to?) those of EU/Mogherini. Or makes very conscious choice to join EU as a third party. Does not become constant US lapdog

Asylum and refugee policy – remain part of Dublin Agreement or lead on drafting a new, stronger system that Brx agrees to (??)

Obviously bad

EU talks breakdown resulting in no deal, WTO terms (this ‘bad’ by DD & May’s aims)

Any withdrawal of UK diplomatic staff from EU capitals, Brussels or vice versa

Breakup of NATO

 

[1] https://www.buzzfeed.com/emilyashton/andrea-leadsom-interview?utm_term=.utYNVaDp7#.ciNLPpG9Q

Brexit tactics and imagination failure

 

The approaches of the two main parties to Brexit are limp. Here are ideas how each could go about their jobs better. I’m not sure any of them is truly desirable, but as we know, I did not want the country to vote for Brexit. However, these approaches at least seem to be consistent and constructive.

Labour

1. The Blair resistance

There is nothing wrong with calling for a movement to stop Brexit if you think it is a bad idea, or if you think the end result will be bad for the country. This is not “antidemocratic”. Governments and parties change their minds on issues all the time, and this is one of the most important issues, and the most complicated process, since the last world war.

It is shockingly ignorant and displays terrible leadership if you promise to barrel on with a policy which, in the face of new information, looks decidedly bad for the country. Most voters and most leave supporters obviously will not be of that opinion now, but by 2019 they may well be. It is a cowardly rhetorical trick to limit their options and those of the government to deny that there is any merit in keeping the door open for a delay or a reversal. Just as leavers correctly criticised some extreme EU federalists for prescribing “more Europe” as the answer to any conceivable future malady, so Brexiteers should be lambasted for maintaining a belief that any version of Brexit is the only acceptable endpoint.

If it will not fight for its own distinct version of what Brexit should look like (below) then I would much rather Labour unite behind a simple anti-Brexit message. The average voter has no idea what the party’s position on the EU is, because it is far too itty-bitty, point-by-point, and riven with internal contradictions and disagreements. Of course presenting the party as anti-Brexit will look bad in the short term as Labour-voting Brexit supporters feel betrayed, but the party’s electoral prospects can hardly be worse. Positioning the party in this way would allow them to take advantage of the chaos and ill feeling we may well see by 2019. In any case, many voters already think Labour opposes Brexit due to its referendum stance and recent silence.

On the question of Blair himself: I would much rather the man was nowhere near this policy or our television screens. It seems that he himself knows his presence is toxic, which is why he waited so long to make any intervention, but in the absence of another prominent left-winger acting as a figurehead for the position, I don’t mind him. It would be nice if Gordon Brown led it instead, if the Labour leadership refuses to.

This tactic probably will not stop Brexit happening, but would build a foundation for later efforts to soften whatever form Brexit takes.

Side note: Leavers who say that if we’d voted Remain, it would be completely impossible to call for another Ref in a few years’ time, are talking crap. Look at Scotland. Look at what Farage and Vote Leave said on the night of the Referendum when they thought they’d lost.

2. Worker’s Brexit

If the Labour Party is not going to fight against Brexit happening, then it should create a simple vision for a post Brexit Britain which is distinct from that of the Conservative party but desirable to large sections of the country. This will allow them to attack the way Theresa May pursues her higgledy-piggledy vaguely pro corporation blueprint, while showing that they are listening to the result of the referendum. Key planks of such a campaign would include:

> a close trading arrangement with the EU which preserves jobs that currently depend on the single market;

> agreement with the EU on mutual healthcare, police cooperation, respect for workers rights, consumer protection;

> using free trade agreements to spread UK standards on labour protection, high quality products, human rights*, environmental progress;

> explicitly reject trade deals which compromise food, chemical and pharmaceutical standards;
using whatever savings eventually result from ending EU budget contributions to pivot from ailing industries suffering from globalisation towards new growth areas** (while fighting unfair aspects of globalisation, such as Chinese steel dumping, which the Conservatives positively encouraged);

> promising a savage fight against cutthroat exploitation practices which permit the worst aspects of immigration (real or imagined) with muscular resources devoted to fighting those paying below minimum wage, gang leaders tracking in nonunionised Eastern Europeans unaware of their rights and working them illegal hours and housing them illegal sweatshop conditions

Such a vision would help craft Brexit and help bring Labour around to a recognisable attitude to the most pressing issue of the decade. Have every MP repeat ‘Workers’ Brexit’ on TV at every opportunity, so much that ‘Long term economic plan’ fades from memory.

The Conservatives

One of the biggest disappointments with the government’s approach to Brexit thus far is its tone. While it is in many ways refreshing that Theresa May refrains from constant media appearances and briefings, it also means that her ministers and MPs are left to run wild and blast out radically different mood music from one another. Some talk about “constructive relations” with Europe, while others tiptoe the line between patriotic pride and offensive jingoism with the subtlety and deliberation of an inebriated hippopotamus.

 

1. Dr Strange Love Bomb

Respected centre-right commentators, notably Andrew Lilico and Tim Montgomery, are vocal advocates for the “love bomb” approach. (Lilico also has a whole CANZAKUK Brexit idea with many good points.) In many ways I feel that that ship has already sailed, given the comments of various Tory MPs, the tone of the referendum debates, and the gnawing presence of Ukip.

However there is still great value in trying to revive a spirit of diplomatic friendship. We should be praising all of the aspects of Europe that we do like, and that we do want to keep, and in general sending the 27 EU leaders the message “it’s not you, it’s us”. (As a negotiation tactic even Brexiteers who actually do believe “it’s not me, it’s you” should see the value in this.) Say we are leaving because we want to keep our traditions of democracy et cetera, but that we still want to work with them on a whole host of issues – not just NATO, but university swaps, arts and humanities promotion, friendly sporting events, a general sense of continental fellowship.

We do not need to make any policy promises on this, and certainly do not need to follow through on them. It would simply be nice to at least begin the article 50 process on a collegiate note, given the distinct danger of it all breaking down later. One of the major issues delaying and upsetting negotiations between the Greek government and the Eurozone was tone, and when the Greek government altered its tone and some key personnel, the crisis was diverted relatively quickly.***

2. Balls Out Brexit

If Theresa May does not have the authority or control mechanisms to carry off the kind of message discipline above, which may well be the case, then the writer and journalist Ben Judah raises an interesting but opposite approach. Rather than going for a mutually beneficial Brexit and essentially becoming hostages to 27 countries and one institution each looking out for their own interests (and beholden to their own electorates), we could try to get a good Brexit deal by being absolute bastards.

I cannot remember whether Ben coined a moniker for his version of Brexit so I will call it “balls out Brexit”. He suggested we negotiate along the lines so well tested by Charles de Gaulle in decades gone by: refuse to trigger article 50, refuse to abide by most of the EU’s laws and mechanisms, make the whole edifice grind to a halt until market and political pressure forces the larger EU countries to get together and offer us a perfect deal. We would have to be obstinate as hell. Stop paying into any EU projects or budgets, start impeding or taxing EU imports on the border, really make it clear that we are willing to follow through on the most catastrophic reading of “Brexit means Brexit” if we are not offered a tastier option.

I’m not sure exactly what the perfect deal would look like in Theresa May’s mind, probably something that included the single market in goods, services, and capital, but not in the free movement of people and without European Court supervision, and with continuing UK input into writing product regulation. But being subject to less product regulation. It would take nerves of steel and again, would require Theresa May to have galvanised her party behind her, probably with the support of Labour’s few Brexit champions too.

It would not be nice, it would not be pretty, and it would almost certainly mean a short-term hit to the UK economy – but if we are not even going to try to get a deal along the lines of Norway or Switzerland, then this seems a valid way to push for a free trade agreement with bells on.

3. Lock, stock and awe (Works with 1 and 2)

It has been commented on a fair amount since the referendum result, that Britain does not have the negotiating capacity to simultaneously handle: exit negotiations with the EU, renegotiations of trade agreements with over 50 countries, putting British representatives on all of the standards and diplomatic bodies where the EU used to represent us, extra diplomats for Ireland, Gibraltar and other obvious flashpoints. Indeed I made this point in my 2015 book on the lessons leave supporters should learn from the Swiss experience of free trade negotiation – we do not have anything like enough capacity. Leaked stories that the Department for exiting the EU is struggling to gain enough skilled staff prove this point.

But we should not be aiming for “enough”. In July and August Theresa May should have very openly and deliberately sought to hire the most experienced diplomats and ex-diplomats of similar countries with experience of representing themselves on the international trade stage: we should hoover up experts from Canada, Australia, Korea, New Zealand, Japan, South Africa, anywhere else that offers them. And we should make a big thing of these hires. We should be showing the world that we will be going into talks fully tooled up and ready, rather than our current display which resembles the diplomatic equivalent of a late-night essay crisis, or a village cricket team deploying children from the next hamlet and the postman. We would not need to boast that we had a crack team, merely show that we appreciated the magnitude of the task before us and had equipped and supported the existing diplomatic corps with the requisite heft.

Both parties

Leaders of all parties should be striving to agree with European leaders that the rights of EU nationals living in other EU countries will be respected along the same lines as they are now. I can see why neither side wants to agree this first, but it would be a display of goodwill and positive intent if all sides agree that this issue should not form part of the main Brexit negotiations and that the millions of Europeans living in Britain, and the millions of Britons living abroad, will be protected. It is a weeping shame that this has not already occurred, especially given that both leave campaigns agreed this should be the case during the referendum fight.

—

* For example, we could be the first Western country to offer a comprehensive free trade deal to Iran, but as well as offering access to our markets, we would say the deal had to include basic provisions of labour fairness, gender equality and so on to be written in by their government.

** A more exciting expansion of this would be for Labour’s general economic position to revive the spirit of Harold Wilson and promised the regions outside London investment and support for cutting-edge high-end manufacturing. This would form the main plank of a campaign to create high skilled meaningful jobs in the UK, using generous government research and development grants and special enterprise zones to encourage businesses to take advantage of our educated workforce, top class universities, and already well-strained, experienced manual workers.

 

*** This is not to say that I think the original Greek aims or demands were wrong: I think they were entirely appropriate and it is a shame both the Greece, for the Eurozone, and for the global economy, that SYRIZA/ Varoufakis did not get some kind of a deal. But that is an entirely different blog.

Small wars to come

TLDR: Beef; cars; shampoo; lawyers; builders; trains; regulators.

In May this year I was still looking forward to a Conservative Civil War. The referendum campaign was going to be brutal for the Tory party as it pitted an exit minority against Cameron’s more loyal MPs. The fallout after a comfortable remain vote was going to be brutal. There would be recriminations, defections, maybe the odd coup attempt. Cameron would hang on, but he would be so weak that his party couldn’t pass much of its manifesto and even the hapless Corbyn might start looking good.

None of that happened. However, the unity the Tories are showing now with their new leader and jenga tower opposition masks a second conflict in the making, one which will emerge from the party’s ideological divide during the Brexit process.

This blog will not discuss article 50, the various exit models or WTO membership. Later than I would have hoped, mainstream conversation is now covering these well. Instead I will zoom through the issues which pit different Tory factions against each other. These factions are:

1. free-market liberals, libertarians, globalists
2. small-c conservatives, migration sceptics, protectionists
3. Parliamentary sovereignty champions, ‘Runnymede conservatives’

Daniel Hannan is a good example of the first, John Redwood of the third, and perhaps Peter Bone of the second.

Australia

All we seem to hear about at the moment is a proposed free-trade agreement with Australia. Leave aside how long this will take to achieve. A free trade deal with Australia will split the Conservatives over its core goals. Australia will prioritise getting good access for its beef and dairy, as it has done in its other trade agreements. Group A will be perfectly on board with this and jubilant that it will provide British consumers with cheaper food. However it will really threaten many British farmers, especially if group A have already won the argument over reducing agricultural subsidies. Group B could kick-off. (It just Australia that poses this problem, it’s the most immediate example.)

USA trade deal – TTIP

You get a similar issue with an America trade deal, or with joining the EU USA trade deal (TTIP). America will outcompete Britain in all kinds of areas including car manufacture and heavy industry. American workers have fewer rights and protections than British ones. To compete we may either see longer hours, eroded labour law, or simply many British jobs being lost. The country may benefit overall but many communities will lose out. Groups B and C may also have grievances over consumer protection being, we don’t know for sure yet, but it looks like TTIP will corrode pharmaceutical and chemical standards, may introduce GM foods and unusual agricultural practices, even dirtier car engines.

Investor protection

The other controversial element of TTIP, which has provoked pretty wide opposition in France, Germany, and Belgium, is the investment protection clause. I’ve written about it elsewhere and it is a nuanced subject, but essentially it may allow big companies to sue states, thereby influencing their lawmaking process.

This was a rallying cry of the anti-EU left in the referendum campaign, and something about which both Ukip and group C were vocally critical. However at the moment it looks like Washington will not budge on the investor protection clause being part of TTIP, and indeed it is part of most other trade deals Britain is already in. Backing out such deals would dismay group A and hammer the economy, since they are included in deals we have through the EU, such as with Korea, South Africa, Mexico. Backing out of these would send pretty negative signals to the markets, which are already pessimistic.

Developing world trade agreements

Ministers in the new government, including those from all three groups, are proudly promising trade deals with populace developing countries such as China, India, and Brazil. Such deals could of course bring many benefits. However, in return for opening up their markets, we know that these countries typically ask for their companies to be able to send workers to the partner country to complete contracts. What that means is, Indian company X wins a contract to build a swimming pool in Brighton, possibly by undercutting British firms’ bids, then sends 30 Indian builders to Brighton for a year to do the building. You can see why group B may not be delighted by this. Even worse, Indian builders may operate under Indian employment law and wage law, much lower protections than British workers enjoy. If you accept that a court reason the country voted for Brexit was to limit immigration then this looks like a poor outcome.

 

Government procurement and trade in services

This points to a problem with the current direction of global trade deals in general, which is to liberalise services and government contracts by stopping states favouring their own companies, thus allowing free markets to operate. Historically, the British civil service has observed such rules quite honestly, which is why a lot of our energy infrastructure is owned by foreign companies, a lot of our trains and police cars are manufactured by in foreign factories, even the running of our prisons and migration detention horrors contracted out to firms with headquarters elsewhere. This is something that group B and sometimes group C detest.

Major WTO deals in the near future include the Trade in Services Agreement and the Revised Government Procurement Agreement (TiSA and GPA). These will both advance the globalised situation. Both will also make it harder for the British government to support British industries like steel, manufacturing, or coal, either by offering them cheap loans, tax breaks, or lucrative contracts. Those would be seen as perverting competition.

[The GPA is actually already passed but as I understand, not fully in force.]

Worldwide regulation convergence

as is kind of implicit from all of the above, it looks like product and service rules and even the rules affecting how governments buy things are being gradually brought into line, at least among Western countries. This will be accelerated and cemented by TTIP and by TPP (a similar deal between America, Japan, South Korea, Australia, Mexico and others). Because UK companies want to sell to one of these places, and to the remaining EU. They will have two follow a lot of the rules agreed in these deals, whether Britain has signed up to them as a country or not. This might cause a lot of frustration in the Tory party and among voters, especially when we could have influenced TTIP much more as an EU member state. There’s no real way to avoid the situation other than Trump winning the presidency, Britain retreating from global trade. Both cheerful alternatives.

 

Hopefully that was interesting and covered topics a little beyond what the news cycle is focusing on. I am sure they will be the battlegrounds of the future. I have no idea who will win.

The least-bad Brexit model is still a bad model

Reports from the BBC, Times and Guardian indicate that Parliament may use its power after Brexit to keep Britain in the single market by joining the EEA (European Economic Area). This option is often known as the Norwegian option, and in my opinion is the least traumatic version of Brexit. However, it would still be worse than retaining EU membership, and is not laid out as comprehensively as its proponents claim.

A few years ago I wrote a long paper on the strengths of the Norwegian option for a prominent think tank. Here I will set out why I do not think it is appropriate for Britain, and the flaws in the arguments of those who support it. [However, it would not be cataclysmic, and if we do vote to leave, I very much hope this is the way Britain goes and the problems I indentify below are addressed.)

This article will assume a basic understanding of the EU debate and the Norwegian model (‘Flexit’/Flexcit, EEA) case and go into some detail. Unlike the more spectacular WTO option, many of the drawbacks of the Norwegian model are rather technical…

Roland Smith, who is possibly the most persuasive champion of this exit ideal (and who outlined the deal on Newsnight), frames Britain achieving the EEA option as a near certainty, if it wanted to. It would be easier to win EEA membership from the EU than a Swiss style deal or souped-up EU-UK free trade agreement, for sure. (Gove’s argument that German car manufacturers would force the whole EU to give Britain a good deal is ludicrous.)  Indeed, an EEA offer is also the prediction of some pro-remain commentators. Anonymous pro-remain MPs have given stories to the BBC and Guardian that they would keep Britain in the single market by opting for a Norwegian option if the country votes to leave. Whether this would be acceptable or likely, and how this aligns with the importance of parliamentary sovereignty, is outlined by Jonathan Portes here. and Charles Grant here.

However, it is far from assured that the option is open: every remaining EU nation and the four EFTA states (Iceland, Norway, Switzerland, Liechtenstein) would each be able to veto it. That’s 31 vetoes.

There’s a serious chance that one or more of these countries will hold up the deal for their own ends. It is dishonest for either side to propose the Norway option as if it were easily attainable. At the very least, the other EU and EFTA countries will try to stop Britain gaining the kind of power that could muck up the EU. This means there will be alterations to what we think of as the EEA option.

The most obvious new conditions forced upon Britain in the event of attempting to join the EEA are:
1) continued budget contributions at current levels, and
2) a removal of the EEA clause that allows an ‘emergency brake’ on the free movement of people, and
3) a moratorium on Britain using the ‘Right of Reservation’ veto power in the EEA treaty for a number of years, or without the other EFTA-EEA states’ support

These requirements would not be fatal to the deal, but would bring the EEA option even closer to Britain’s current situation, so less attractive to Leavers concerned with migration controls or absolute sovereignty.

It should also be noted that every single current piece of single market legislation would stay in place in the UK. Not only would there be no red tape bonfire, there would be not even a candle burning, while the Brussels pipeline would continue to pump out rules that we would be legally obliged to adopt. Again, this would help economic continuity.

The Norway option is supported by group of eurosceptics bound together as the Leave Alliance (LA) whose members are united behind a distinct plan for leaving the EU. The full-length version of this is known as Flexcit (Flexible Exit and Continuous Development), is over 400 pages, while the 48 page short version is entitled ‘The Market Solution’.

Prominent in this group are Dr Richard North of EUReferendum.com and Robert Oulds of the Bruges Group.  The group is not closely affiliated with the prominent Eurosceptic campaigns (Vote Leave, Leave.EU and Grassroots Out) and indeed frequently criticises members of each of them for poor performances, tactical failures or factual error.

I don’t summarise the plan itself here, so a look at The Market Solution would be useful for readers new to the topic. This note does not cover the obvious political drawbacks such as continued free movement of people, or the largest negative economic and diplomatic consequences, detailed by John Springford here.

1. The most basic concern is simply that Flexcit does not give a convincing account explaining how Britain would gain EEA-EFTA membership. As I set out in The Norwegian Way pp.11-12 there is considerable difficulty in this happening, since any EU member or EFTA member could veto it. It is possible, certainly, but suspect the A8+2 countries would push for UK budget contributions to stay at the level they are now, rather than the per capita level Norway pays them, before accepting the deal.
   I also expect the EFTA states would push for a mechanism meaning Britain’s influence on EFTA’s direction was strictly limited, lest her size change the whole bloc’s dynamic.
2. Failing EEA membership, Flexcit sets out the ‘Shadow EEA’, which sees Britain unilaterally adopting all EEA single market legislation (including the free movement of peoples). The hope is that this would force the EU to continue offering single market access on current terms. Flexcit treats this disappointingly breezily: it assumes that with regulatory equivalence the WTO would force the EU to keep single market access open. This is mildly convincing in terms of NTBs and TBTs, but not in terms of tariffs or quotas, or the rights of UK citizens in the EEA. If the UK left the EU without a formal agreement, the EU would be obliged to apply the common external tariff (CET) to it regardless of the UK’s regulatory equivalence efforts.
   If one or more EEA member had formally blocked UK EEA membership, it is difficult to see the Area’s members all accepting a de facto continuation (especially as, if Britain were not a formal EEA member, it would not be paying EEA-style contributions).
3. The Flexcit solution, despite being extremely well researched regarding the working and importance of global/international standards bodies, overstates their importance; and it overstates an independent Britain’s possible influence within them. While Flexcit and the EUReferendum blog et cetera show many examples of Norway or other small states influencing global rules, and thus influencing America and the EU, this is very selective sampling. It usually has to do with one of Norway’s few key sectors such as fisheries or oil: the UK is a much more mixed economy with far more important sectors.
   No attempt is made to see in which cases Norway (or whichever state) is powerless or sidelined, and there is little discussion of the fact that the EU itself dominates many international bodies, and would be on guard against Britain directly opposing it.
4. In any case, because most of these international bodies rely on consensus or soft law (industry best practice, codes of conduct), or the private sector, or a multi-layered procedure, it is hard to see how even a titanic effort of diplomacy in global bodies will compensate Britain’s lack of a vote in the EU institutions, except just possibly in the long term (beyond 10 years).
   As we’ve seen from the failure of the WTO Doha Round and the re-emergence of bilateral and plurilateral deals, multilateralism has a large number of limitations and it is unclear whether the UK’s enthusiasm alone could revitalise such a process.
5. It is likewise unclear whether other countries will be willing to take up the British offer of Partial Scope Agreements if multilateralism and FTA attempts fail. They could be excellent in some cases, but in many, states will wish to keep a sector protected as a bargaining chip in return for the liberalisation of a protected British sector, in a more comprehensive FTA. It is particularly hard to see Britain winning a slew of PSAs from America without making large concessions elsewhere.
   Flexcit fails to demonstrate why other countries would be willing to look at ‘Unbundling’ issues with Britain alone.
6. Flexcit feels especially weak when it moves beyond the EEA stepping stone and tries to show the potential of further ‘stones’. The idea of a free trading Europe orchestrated by UNECE (the United Nations economic commission on Europe), with Britain a principal architect, is very hard to swallow. Why would the EU agree to being superseded (phase three)? What is in it for France and Germany?
   How does a role in UNECE, while Britain remains an EEA member, protect Britain from the EU passing EEA-relevant laws that are not inspired by international standards, or have damaging gold plating? It does not.
   Bodies like the G20, OECD and WTO are indeed influential on trading rules and product standards, but influence within them often relies on blocs/alliances/groupings (e.g. G10, ACP, Cairns), which Britain would be new to. Britain will probably end up either aligning with the EU in virtually all cases, or aligning with the United States and being dominated space even more.Flexit needs far more detail on how an overall leadership/influential position could be developed, rather than just impressive case studies. P401 attempts this but without much conviction.

7. How could Britain lead the whole developed world to adopt a migration & asylum approach that addresses push and pull factors?
   The analysis of push factors in Flexit is excellent, but we are seeing how hard it is for the (centralised) Schengen area to coordinate on relatively unambitious migration measures. Post Brexit, the UK would be a lone voice annoyingly telling other states what to do to address their problems – unlikely to go down well. UK is already leading on funding refugee camps near Syria, for example, and no one is following us.
   Britain alone adapting its fisheries, foreign, foreign aid, agricultural and trade policies will not have an impact on push factors adequate to solve migration and asylum movement into Europe (and towards Calais).
   (On a side note, addressing many of the Pull factors Flexcit identifies would take decades if not generations to bear results, so do little to satisfy voters whose primary concern is current migration levels.)
8. There is a serious danger in overstating the Veto and Emergency Brake powers of EEA members. Using the veto (reservation) might, as I argue in TNW, be fine in limited product areas, but using it to stop an important EU law that the EU considers EEA relevant would trigger a political crisis. Likewise using the Emergency Brake on migration soon after exit would cause a crisis and probable suspension of the EEA system, and the EFTA EEA members would not allow Britain to join if it suspected the UK Government of entertaining such plans.
9. Flexcit recognises the ‘Brussels effect’ on p.187 but seems to ignore it almost everywhere else: often it’s the EU that leads the global bodies. The Brussels effect essentially notes that even superpowers (America) follow EU product regulations in areas where the EU has legislated first due to the size of its market. This applied to important sectors such as aeronautics and monopoly law.
   This would be far more noticeable for the UK than for America (as the Bradford paper discusses), especially following the conclusions of TPP and TTIP, after which the UK will be ‘sandwiched’ between three blocs with converging regulations.
10. It should not be overlooked that the EEA option does require tariffs on agriculture and fish products. Overall this may not be too bad, but it implies a serious hit to the trade along the Irish border. Presumably beef and potato imports from the Republic would become more expensive, as would Continental delicacies and alcohol. In my personal opinion this is not compelling argument against Brexit, but ought to be stated clearly.
    Norway has preferential tariff access for its fish into the EU but not zero tariffs. This implies the situation for British fishermen would be substantially worse than now: it is also unclear whether they would get better TAC quotas after Brexit. Haggling over fishing grounds and fisheries craters would be no simple business, and the UK may well sacrifice fisheries as it pushes for continued financial services access.
11. Broadly speaking, Flexcit commits a lighter version of Dominic Cummings’ sin in saying Britain can be ‘flexible’ or can make a ‘democratic decision’ whenever there’s a tough question; in this way it avoids answering the most difficult challenges. It also displays a sketchy reliance on the future negotiation abilities of Britain in global bodies without proving that Britain would have such superhuman capability to anything like the required degree.

A problem that is not unique to Flexit is that of uncertainty. Because Vote Leave is not behind the model publicly, and neither are any remain MPs, the fact that eventually the country might end up in an EEA single market situation is probably not enough to reassure the markets after a close Leave vote. The possibility that it would cause a constitutional crisis, or at least continuation of bitter political disputes between British politicians before the issue is even raised with the EU and EFTA states, implies that UK stocks could take a hit.

To reiterate, I think the Norwegian option is the least bad Brexit option and would not be too terrible for the country. It has several advantages which are laid out in my earlier paper. However I personally am unconvinced by the case for leave so far. I do not believe the EU is a ‘prison’, and the Norway option is the best route to take if the EU ever got so bad that I thought Britain should leave it.

In the spirit of constructive criticism a version of these points was sent to Flexit proponents earlier this year.

If anyone is interested in me writing this in a shorter and more digestible form, get in touch on Twitter or by email.

 

Staying in the EU

My job for the last 3 years has been EU researcher at a London think tank. My work was mainly on the problems of the EU and the different options for leaving the EU – in short, what might be called Eurosceptic. They can all be accessed here for free.

Over the course of my time there I have become convinced that it is best for Britain to remain within the EU, although it certainly has its problems. I have now left Civitas.

Here are some of my reasons for supporting Remain.

• the EU is good for Britain’s economy and working people
• the EU is not a threat to Parliamentary Sovereignty
• the Vote Leave ‘BMW leverage’ argument for a good Brexit deal is flawed
• the Brexit case is wildly optimistic
• the idea that Brexit would usher in a democratic utopia is undermined by leave leaders’ records
• the EU’s migration rules are good for Britain
• Brexit would be bad for security
• TTIP is not a reason for leftwing voters to support Leave
• All Remain arguments necessarily sound like scaremongering, and that’s fine
• Potential budget savings from Brexit are tiny compared to minor economic fluctuations
• It is insincere to fight the referendum on class lines (complete with rebuttal from my ex-boss)
• The free movement of people is an important lifeline for young Britons
• The least damaging model for exit is still damaging

Here is how I think the government could promote Leave-Remain reconciliation, and try to fix the EU’s problems, after a Remain win:

• Reconciliation after a tight Remain win

You could also argue this (by a colleague), which is mildly true but barely relevant:

David Cameron’s renegotiation efforts have changed the EU for the better

Here is how the EU would have to develop for me to consider pushing for another referendum and wanting to vote to leave.

I have a few more articles planned, but await people to pay me to write them.

I am happy to discuss my views further.

 

Book Review: The Feminist Utopia Project, fifty-seven visions of a wildly better future

The Feminist Utopia Project, fifty-seven visions of a wildly better future

edited by Alexandra Brodsky, Rachel Kauder Nalebuff

This was a great book. But then, I expected it to be that from the LRB interview I had seen about it. I had to buy it from Amazon USA because, as a modest art-academic project with the Feminist Press, it has not been published in the UK (yet).

The collection is mostly short stories and essays but includes poems, listicles, art, the lot. I’m in the middle of writing fiction about a world with different gender dynamics so I especially wanted to look at these, even more after I saw the contributors included Melissa Gira Grant and a few other writers I already enjoy reading.

This won’t be a particularly thorough review: if you’re the kind of person who thinks they’d like to read a book called the feminist utopia project, yes, this is the kind of book you would like to read. But here are a few observations.

PAPER NUKES: Navy Whistleblower Reveals Britain Abandoned Atomic Missiles In 1998 & Pretended Ever Since – The Middlesex Mendax

The United Kingdom has not possessed a real nuclear deterrent since the early days of the Blair Government, a shocking whistleblower has revealed. The first New Labour administration decided to give up the Trident missile system, which had been run by four Vanguard-class submarines, to save Britain billions of pounds.

Since then, documents seen by the Mendax prove that Britain has kept its lack of actual atomic weaponry a guarded secret. The old submarines were kept in shady docks and occasionally went out with skeleton crews to show they still existed. They never patrolled the world’s deep seas after 1998 though, and they never possessed the power to eradicate Moscow or Samoa.

Our source claims that the conspiracy was a way to save over £30 billion but maintain an effective nuclear deterrent. This was a tactical decision by Tony Blair and Gordon Brown, who felt that they had to accept the Cold War was over and the missiles useless, but did not want to be seen as weak on defence. Because other countries, including Britain’s allies in Nato, believed that the Royal Navy could still wipe out millions of lives in seconds, no foreign power ever considered invading.

Throwing mud

<Normal housekeeping on eye and hand pain>

Loathe though I am to spin in favour of David Cameron, here are some disconnected thoughts on the Ashcroft/Mail rumours:

Superheroes are next to useless

Not just superheroes, really. Jedi too. Super-spies like 007 or Agent Carter. Badass detectives like Sherlock Holmes (whether Downey Jr, Bumblecatch or Miller).

Seriously, if I had an Iron Man suit waiting in my spare room, it’d be even dustier than the broken vacuum cleaner. If Thor’s hammer Mjolnir found me worthy then I’d use it to impress moralists and for cheap interstellar travel, but not to hit people with. If I had a lightsabre and some nifty telekinesis abilities, I’d think they were badass toys to help cut wood for the fire. If I was bitten by a radioactive spider then I would probably enjoy touring the rooftops of Canary Wharf and the City, but doubt I’d fight much crime.

The case for a British-led Greek bailout

I do not seriously think Britain’s austerian Conservative government has a snowball’s chance in Hellas of leading a Greek bailout. Cameron and Osborne have been dragged into contributing a small amount to an EU-wide measure, having kicked up a mighty fuss and received assurances that Britain’s contribution is underwritten.

Still, I think it’d be a good idea for this government to seriously consider leading a bailout. I would have the prime minister convene a debt relief conference with (if possible) contributions from America and Canada, both of which are in late-stage talks over trade deals with the EU, and if possible South Korea, South Africa and Mexico, all of which have free trade deals already.

The IMF, Centre for European Reform and eminent economists like Paul Krugman, Joseph Stiglitz, and Jonathan Sachs all say current the current situation is unsustainable and the measures the Eurozone is imposing on Greece in return for additional loans will ruin the country even more. Debt relief (pushing back repayments) now seems to be on the table, courtesy of Angela Merkel, but that is far off and contingent on full implementation of Eurozone model austerity. Merkel has categorically ruled out a haircut (debt write off). It’s far from an Obama-style stimulus package or Sachs-model shock therapy which could actually make Greece grow again. It won’t have any impact on the currency either, because Greece will remain locked into the euro while it grows less and less competitive.