Friday 24 November 2017

Politics at Friday lunch: Why are we leaving the customs union again?

"There are no health reasons why you couldn't eat chickens that have been washed in chlorinated water" Liam Fox
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Liam Fox made a very interesting admission this morning. In an interview with the House magazine, the international trade secretary seemed to put the blame for our sluggish exports on British companies rather than the suffocating restrictions of the EU.

"From Britain's point of view, our main advantage doesn't lie in getting more trade deals, it lies in getting more trade," he said. "So, we need to do an awful lot better with the markets that we already have access to globally."

He's right of course. The EU has never been a barrier to 'global Britain' or its ability to export all over the world. In 2013, Britain's exports to China were worth £7.6bn, whereas France's were worth £14.3bn and Germany's £55bn. But Fox's admission that trade deals aren't what's required to boost British exports is rather surprising, given this is the whole reason we're leaving the customs union.

Perhaps he saw yesterday's comments from YK Sinha, India's high commissioner to the UK, which made it clear that free movement of people would be a central requirement of any UK-Indian trade deal. This has long been the country's position, just as China's position is that it should have a greater foothold in the UK's energy infrastructure.

Wilbur Ross, the US commerce secretary, made America's requirements for a trade deal clear earlier this month: Britain would need to dismantle EU regulations and agree to (typically much lower) US ones, on things like pharmaceuticals, data protection, chemical safety standards and, yes, meat treatment.

In each case, these requirements seem to make any trade politically impossible. Will those who voted Leave really tolerate free movement from India replacing that from Europe? Given the social media horror story of reports about MPs voting against animal sentience this week, does the government really think it can get a deal on chlorine-soaked chicken and hormone-injected beef past the British electorate? The answer is no.

The sole advantage of leaving the customs union - signing your own trade deals - seems undeliverable regardless of our membership of it. But all the disadvantages are very real and highly deliverable. The tariffs which will be imposed will damage few sectors, but those they do hit, like manufacturing and agriculture, will be hit very significantly. Country of origin checks will apply punishing bureaucratic requirements to an on-the-dot competitive trading system.

And then there's Ireland. Leo Varadkar, Ireland's prime minister, has finally given up on trying to talk sense to Westminster behind the scenes and started throwing his weight around in public with the threat of a veto on the first stage of Brexit talks. The Sun told the prime minister to "shut his gob". DUP leader Arlene Foster told him ominously that he "shouldn't play about with Northern Ireland". Daniel Hannan, a fairly moderate Brexiter, even called Ireland "the other side", as if they were a strategic enemy. It's a sign of how quickly the decision to leave the customs union is toxifying relations between Britain and Ireland.

That has significant immediate consequences. Dublin was expected to be our great friend in Brexit talks. It is shackled to us economically and needs a decent deal, so we thought it would fight our corner. But first it needs to know the border issue is sorted and despite all the British promises of "creative" or "hi-tech" solutions, the truth is that customs unions have customs borders. Checking for country of origin and tariff payments creates the infrastructure of a hard border. Our insistence of leaving the customs union turns a country that should be our main ally against us.

But it also does something much more dangerous and long-lasting. It threatens the peace in Northern Ireland. This is still considered scare-mongering by Brexiters in London, but that is not how it is discussed in Nothern Ireland, where a return to violence is a common topic of conversation. As one 78-year-old who works by the border told the Guardian: "We definitely don't want a hard border here as we had one before, but if we do get one, there's going to be hassle and I'd say trouble as well."

So the question emerges: Why are we doing this again? Not Brexit, not even the single market - the customs union. Leaving seems to involve an awful lot of pain and absolutely no gain.

We are sabotaging our own negotiating alliance, alienating our closest ally, threatening the peace in Northern Ireland and risking British manufacturing and agriculture in order to sign trade deals which the secretary of state anyway admits we don't need and would be politically impossible to secure even if we did.

If anyone can work out why we are behaving in this extraordinary way, please let us know. Because it seems quite a bit like madness.

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Friday 17 November 2017

Brexiters are their own gravediggers 

"The barrier to our future is often the very plans that we've created to get there" - Craig D. Lounsbrough
 
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The chief obstacles to Brexit do not come from its opponents, but from the incompetence of those trying to deliver it. This fact has largely escaped Remainers, who often worry that there is no-one to lead their side of the argument. In reality, no political figure - regardless of how charismatic or principled they were - would be able to compete with the Brexiters' capacity to sabotage their own project.

This sabotage is mostly the result of a lack of planning. And that lack of planning is the result of purposefully-created Brexit echo chambers at the height of government. Industry leaders going to see David Davis when he became secretary of state were taken aside by civil servants ahead of the meeting and told to walk in saying that Brexit presented huge opportunities. Any who didn't were soon asked to leave.

Since those early days, Davis has avoided those who highlight the complications of Brexit or who insist on reporting the views about Britain's behaviour from the continent. Instead, he has surrounded himself with low-calibre ideologues and cultivated media contacts only with pathologically supportive columnists.

Echo chambers tend to rot the brain and Davis' echo chamber is no different. His speech to German business leaders yesterday was an unmitigated disaster, met with a mixture of bemusement and outright mockery.

What is extraordinary is how tone deaf it was. "Putting politics above prosperity," Davis said, "is never a smart choice". This was greeted with astonishment. After all, Europeans have spent the last 18 months watching Britain doing exactly that. But Davis does not really know this, because he has not been meeting with Brexit critics. He has been meeting with Brexit supporters. His own staff should plainly have been able to draft a speech which did not make such elementary tonal errors, but they are not competent or wise enough to do so.

Davis then elaborated at length about the kind of trade deal he wanted with Europe - one for a country which was "much closer than Canada, much bigger than Norway". This is a coded reference to the ultimate British policy aim, which is to secure a deal which offers frictionless trade but rejects regulatory harmonisation. This is not possible, because the frictionless trade is a result of the regulatory harmonisation. It is like trying to fly using a car. But Davis has not recognised this yet, because he is surrounded by fellow true believers, rather than those speaking accurately about what is possible and what is on offer.

Humiliatingly, his speech coincided with the leaking of Europe's sketch of a trade offer. It is miles away from the Brexit secretary's rhetoric. If Britain is outside the single market and customs union, the only offer available is a standard goods trade deal, along the lines of Canada. It has been clear throughout this is the case, because Europe has been saying it. But Davis seems blissfully unaware.

Another dose of cold reality was being delivered by the Irish prime minister, Leo Varadkar, who today gave Theresa May a one month deadline to provide detailed proposals for avoiding a hard border in the island of Ireland. She cannot do this, for the same reason that Davis cannot secure frictionless trade without regulatory harmonisation. It is not possible. It is not on offer. But Westminster still seems hopelessly certain it can be avoided by 'creative' and 'high-tech' solutions. The reasons they believe this has much more to do with faith than reason.

Brexiters have not just misunderstood how customs borders work, they have also misunderstood the power dynamics of Bexit. Ireland knows that it has far less power in the second stage of talks than it does in the first stage, where the issue of the border effectively provides them with a veto. They are now using that leverage granted to them by the structure of the talks. Westminster seems shocked, but it was evident that they would do this throughout the process. The only way you can be shocked is if you failed to war game the structure of the talks before agreeing to them.

It is all coming apart for the Leavers. And the manner in which it is coming apart would be entirely predictable to anyone who had been following events and reading into the complications they brought with them. Instead, the ministerial team has closed itself off to complication. That may be emotionally comforting, but it does nothing to reveal the hazards ahead. They are now stumbling into precisely the pits their critics warned were ahead of them.


 

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