What People Would Vote For

Reviewing what people would vote ‘For’ in the positive sense, as opposed to them voting against something, that something being Political Union:

An Interesting Development

An Adam Smith Institute sponsored poll released in the Sunday Telegraph on the 12th June has shown that if offered the choice, the people of Britain would support leaving the EU to replace the political union with Single Market membership.

OLYMPUS DIGITAL CAMERA<A New Container Handling Facility at Liverpool. Trade will continue.>

Listening to David Cameron on the Andrew Marr show on the same day, it became clear (again) that everyone making the Economic case for Remain is not making that case based on EU political union. They are making it based on Single Market membership and Tim Farron, leader of the Liberal Democrats later tweeted a similar message.

This is significant as it echoes the 1975 referendum which many voters thought was about the ‘Common Market’, clearly a trading not a political arrangement.

My own very limited poll showed that people are willing to accept the conditions of membership of the single Market in one particular respect which is contentious for many Brexit advocates: immigration.

Single Market for Brexit Tweet Snippet

As you can see from the date of the poll, this is not something that has just come to mind due to the ASI poll. The work of the Leave Alliance is based upon assuring voters that there is a safe exit route from the EU that takes account of the Economic uncertainty.

Some articles about this latest polling development and its implications have already been written by Leave Alliance Bloggers and each of the bloggers listed below will have other articles you may find of interest if this approach to leaving the EU appeals to you (it Should!):

White Wednesday, The Sceptic Isle, The Brexit Door, Semi Partisan Sam

Some History

In 1975, the pro EEC politicians were known as Marketeers, indicating that they supported Britain remaining in the Common Market. There was no such thing as the Common Market of course, it was actually the European Economic Community (EEC). The EEC was also referred to as ‘The Community’ in reference to the European Economic Community.

There are some who say that the public knew exactly what they were voting for in 1975 and that government information made it clear. I think that isn’t the case for one reason alone: The Heath government kept secret Foreign and Commonwealth Office (FCO) advice that joining the EEC meant a huge loss of sovereignty. Ted Heath himself appeared on television to reassure the electorate. But worse than that, it transpires that the civil service and the government of Britain had known for years what the end goal of the EEC was: A single European state

Although it was debated in the House of Commons at the time and at various points subsequently, British politicians have mostly just avoided the subject of a single European State. It seems this has been known and is discussed quite openly in continental Europe however. Here’s an image that I tweet out often, to press home that this is the actual question that you are being asked on June 23rd:Francois

Image Courtesy of Paul Reynolds at The EU Question Blog.  The article it is linked from is here.

I think it is clear that the UK public in general don’t think this is what the EU Referendum debate is about at all and Remainers will very rarely state it in such terms.

The main argument, from both sides has been about trade, so lets continue to address that.

The EEA Single Market

A reason politicians do not make a clear distinction between the Single Market and the EU is that calling it out would let people know that they are not one in the same. I find that vague descriptions give politicians more room to be evasive, hence the even more vauge ‘Europe’ term used by Remain.

In fact, the Single Market is the European Economic Area (EEA). The EEA entered into force in 1994 and allows members of the European Free Trade Association (EFTA) to access the EU Single Market on roughly equal terms.

From the EU website:

To establish a dynamic and homogeneous European Economic Area, based on common rules and equal conditions of competition and providing for the adequate means of enforcement including at the judicial level, and achieved on the basis of equality and reciprocity and of an overall balance of benefits, rights and obligations for the Contracting Parties. The EEA Agreement allows for EEA EFTA participation in Internal Market relevant Community programmes and agencies, albeit with no right to vote. The EEA-EFTA states also make financial contributions towards the reduction of economic and social disparities in the EEA.

Note where it states ‘albeit with no vote’, that does not mean that EFTA states have no influence over EEA relevant laws, they do via joint EFTA/EU mechanisms.

This very short video from the Norwegian Ambassador to the EU makes clear both that Norway (an EFTA member) does not pay for access to the EEA Single Market (though they do make other payments), but also that the EEA is intended to be a level playing field for trade.

Agriculture and Fisheries are not included in the EEA. Access to the market for Financial Services are covered by so called Passporting Rights (Bank of England website).

The benefit of moving from EU Political Union to a predominantly trade based arrangement is return of supremacy over British laws, although compromises are still required to enable a Single Market which is more than a traditional Free Trade Agreement (FTA).

The advantage of the EEA agreement is that it is pre-existing and the UK is already a signatory to the agreement. This means it is almost certainly the offer that will be made by the EU to continue trading relations between the the EU and UK due to the relative ease of implementation and the consequent lack of disruption to both parties in the current fragile economic climate.

In truth the potential impact of going into heavy negotiations with the UK is too much for even the EU to manage.  I give some detail on the dynamics behind this in my The Deal is Already Done post.

The Journey Doesn’t End There

So, moving to an EFTA/EEA position presents the safest, least disruptive step out of EU, if the British public votes for and Politicians in the House of Commons agree to enact Brexit.

However, EFTA/EEA does have limitations and wouldn’t suit the UK long term.

The most prominent current member of EFTA taking advantage of EEA market access is Norway. Norwegian politicians still maintain that Norway should join the EU but the people have never been convinced. However, even those politicians and officials who don’t want Norway to join the EU still raise issues about the EEA mechanism.

If the UK, a substantially bigger and importantly a much more diverse economy than Norway moved to an EFTA/EEA position, we would likely want to change the agreement in time or come up with an alternative mechanism.

The Flexcit Plan from Dr Richard North and the team at eureferendum.com and The Leave Alliance at Leavehq.com defines an alternative to the EEA based on UN regional bodies.

You can read the Full document (420 pages) or the Pamphlet version

But Vote Leave Don’t Want The Single Market!

Although the Flexcit plan has been in existence for over 2 years and it is being read by Civil Servants in Whitehall, it has not been adopted by the officially designated lead Leave organisation, Vote Leave. Furthermore, Vote Leave don’t advocate the UK remaining in the Single Market anyway.

As pointed out by Richard North in an article published after Cameron’s appearance on the Marr Show that I referenced at the start of this post, Vote Leave do not represent the entirety of the Leave campaign.

Vote Leave actually represent… Vote Leave!

I’m not suggesting its a case of Boris wanting to be Prime Minister (I don’t care less, I won’t vote for him when he needs the support of the public and you don’t need to either) but that Vote Leave has a particular message, fashioned by a small group of people, some of whom have come to the Brexit debate late in the day and have not grasped the enormity of what they are dealing with.

The actual events that would lead to the Government (of whatever composition) taking up the Civil Service advice to press for retention of Single Market membership has been covered by Roland Smith of the Adam Smith Institute here.

If Vote Leave endorsed EEA as an interim position before the UK moves to a long term arrangement over time, a huge question mark would be removed from the Leave position.

As it stands, Remain can simply taunt Brexit supporters with ‘They just don’t know’!

All so avoidable and the Public know it even if Vote Leave don’t seem to.

The Deal is Already Done

This post is a follow-up to my first post about the trading relationship between the UK and EU post Brexit

I put a lot into the mix in that blog post, possibly a little too much for maximum coherence (I’m still a new blogger) but the following stands in terms of my conclusion:

“So, problems all around, UK economy not looking great but neither does the EU27 (as I might now refer to the remaining member states after Brexit if it happens) particularly if you include unemployment levels, especially youth unemployment . Any conclusion we can draw?

YES. Who wants to impair the economy of either the UK or the EU by unreasonable trade conditions after Brexit?

The truth is, neither party can afford it.”

In this post I take this theme forward, both in light of my own further thoughts and developments since my earlier post.

This post from Roland Smith at the White Wednesday blog prompted me to think again that it is not so much that the UK is in a uniquely weak position but that everyone is in a weak position.

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A view across to the new container terminal being built at Liverpool. Photograph taken by the author.

I would normally write thousands of words now before revealing the conclusion down at the bottom of the post. In this case, I’ll make an exception and reveal the punchline now:

I believe that there is already agreement between the Cameron Government and the European Commission and the main leaders of EU member states about what the post Brexit trade settlement and relationship will be. The reason for this is very simple, that there is not only a compelling need for one but it must also be concluded so rapidly that there is very little time to do this following a referendum result for leaving the EU.

In summary it relies on the following:

Damage to both the UK and the EU will be unacceptable in the event of breaking up without a viable deal. This is supported by statements from the IMF that Brexit has the potential to inflict regional and even global damage. Clearly this is not something that uniquely affects the UK, a point not too many (any?) commentators have picked up on. Normally it is only described how weak the UK is in a bargaining position when it comes to trade due to the size of the EU as a portion of our GDP.

The nature of the deal will by necessity need to ameliorate the impacts predicted by the IMF and indeed uncertainty causes damage itself. We don’t need to wait for a poor deal to see harm done, markets not knowing what post Brexit arrangements are for an extended period will harm investment and spending. That starts the instant a win for Leave looks likely, it doesn’t have to wait for the announcement of the referendum, let alone the announcement of the deal itself. This effect is amplified of course by all the doom laden predictions coming from the Government and Remain camps.  Cameron himself has made this problem worse in his drive to win the referendum at all costs.

So we can see the timescales are not years, months but likely days or weeks maximum (as we are only a few weeks away from the referendum as I write this).

In terms of timescales for a deal, we are potentially looking at 2 years for Article 50 negotiations to complete and that is only after they have been triggered. There is talk of months of preparation before the UK is ready to begin formal negotiations and that a grand tour of Europe (again) by Cameron or his successor will be undertaken to smooth the path in formal negotiations. I disagree and feel we will see no such thing.

Here’s why.

So called ‘leaks’ from the EU Commission indicate that the EU wants a speedy conclusion to Brexit talks. They are couched in terms of an ultimatum to the UK but that is likely a convenient dressing up of the practical view that a solution needs to be found very rapidly to prevent the aforementioned uncertainty in the markets. In fact the wording I saw was along the lines of ‘A speedy divorce, followed by negotiations over time’. Also, see the following tweeted by a pro Remain Twitter account:

EU Commission Ultimatum

This timeframe is plausible as Markets are closed. The fact that the UK ‘will be summoned’ when there is no such power for it to be so, indicates that this is already agreed and the whole thing will be stage-managed. Although this is not part of the formal (Lisbon Treaty Article 50) process, it is part of the need to manage the public and business perception that, although Cameron didn’t support it, the public has spoken… etc.

Yes I am that cynical and so should you be.

The only plan for leaving the EU, Flexcit from Richard North and team at eureferendum.com (campaign site leavehq.com) takes the same line as the ‘leaked’ commission plans. Namely to exit the EU quickly and with the absolute minimum of disruption followed by a phased withdrawal without the pressure of time and the highly charged post referendum circumstances.

The only viable way to achieve this is to formally leave the EU but effectively remain in it as much as possible. This will be achieved by UK moving from being a full EU member to being an EEA Single Market only member but with ‘continuation’ agreements in place to ensure that all programs, funding etc. remains firmly in place and, initially at least esentially unchanged.

Thus, there is a way for both Cameron and the EU states to come out with a market calming statement very early on, holding off those regional and global impacts.  The real work of implementation would then start of course, as the Sunday announcement is just that, an anouncement.  It may be that this latest EU ‘Deal’ is only agreed with the more powerful states, in the hope that the smaller ones will fall into line as they normally do.  I don’t think we should believe at all that the reality of Brexit has not been discussed between european leaders.

But regardless, the process for subsequently agreeing the deal is as per the EU treaties and this would of course take time. The UK would formalise it’s postiion and submit the Article 50 notification in due course and following our own parliamnetary proceses.

Those that argue for a ‘WTO Solution’ are asking for trouble for more than one reason but not least of all that removing the UK from the EU is not an overnight process and indeed it is not a process that can be done inside 2 years. Not only would the WTO option be highly damaging but the timescales required to agree the clean break from the EU implied by taking that option kill it stone dead. After all, we are integrated with the EU in far more ways than just trade.

In my next post I will flesh out the ideas presented above and provide links to sources for further reading etc. i.e. the multi thousand word blog post I find myself compelled to write!

Last Word: Right on cue, the morning I posted this article BBC Radio 4 Today was interviewing a German CEO of a German bank. When questioned about his thoughts on the impact of Brexit, he replied ‘some business may move but overall more a loss for both UK and EU’.

A deal will be done.

Sovereignty or Independence? (2175 Words)

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This post authored by Alan King, the blog founder and curator.  Contact Alan via the comments or on twitter (Previously a twitter persona Prez Shulz, now by name) @akabilky

Sovereignty or Independence?

Thank you for visiting the EUandEurope blog.

In this blog post, I will be exploring the practical difference between the much misunderstood word Sovereignty and the much better but still misused term Independence and why both are important but one has much greater importance on a day by day basis.

Some of my thoughts were initially prompted when I read a blog post by Roland Smith on his blog, giving an Analogy of the EU referendum, prompting thoughts on what specifically the relationship between UK and Europe is analogous to.

There have been many analogies about the EU and the UK relationship to it.  At the time of joining, it was seen that the European (EEC) train was leaving the station and the UK had to get on board or miss out. This one never seems to lose currency, e.g.:

  • The Common Market (European Economic Community) train is leaving..
  • The ERM (Exchange Rate Mechanism) train is leaving
  • The Euro Train is leaving

Depending on your level of knowledge about the above events, you may possibly be thinking ‘better we had missed the train!

Of course we have the benefit of hindsight now and a different analogy may be appropriate for the position we find ourselves in.

Daniel Hannan writing in the Telegraph used a bus analogy in a different way to the above train ones.

When you’re on a bus, heading somewhere you don’t want to go, the status quo doesn’t mean remaining in your seat. It means stepping off. You won’t get another chance.

So train or possibly a bus, maybe a tram:

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A Tram Station in The Hague Holland. Photo taken by the Author whilst working in Holland.

Both good maybe but both wrong in my opinion.

The Good Ship Britannia

Politically speaking UK would be a seaworthy ship, large and very capable but, unfortunately being towed by a supertanker.

No ordinary Supertanker, this one has 27 ‘Captains’ (actually more when the Commission, Parliament and Council are accounted for) each of which doesn’t control the direction of the EU Supertanker.

Let’s analyse why the Ship tethered to a tanker is a good analogy for a number of reasons.

Although, left to her own devices, the UK can quite successfully navigate the high seas and endure the roughest storms; whilst tethered to the EU her ability to navigate is severely restricted by the pull of the EU tow line.

Tethered to the EU supertanker, we have little control over destination, though we can use our engines to alter course a little, we burn a lot of fuel (political capital) doing so and after a while the tanker returns to its original course, the one it has always been on.

We saw this most recently when David Cameron ‘annoyed’ other member states with his ‘Renegotiation’. some of that down to Cameron’s tactics of course.

If you believe that David Cameron delivered a ‘Reformed’ EU then you need to appraise yourself of some basic facts about who made the agreement and what force it has in law. I penned an article on this recently that drew on eureferendum.com‘s ‘Dave’s Dodgy Deal‘ articles.

Continuing with the analogy:

If we throw over an anchor in desperation at the course being set, we could temporarily slow the larger craft but then we don’t move anywhere meaningful and neither do they. An unsatisfactory situation.

So, while there’s a tow rope to the larger craft and without wishing to use either of the above options, what can we do?

Influence

If we want to influence events, we need to talk to the crew of the larger vessel.
We have a radio but communications rely on the other end responding. They will do that of course in calm waters with no other preoccupations.  We have some of our own crew seconded to the main vessel, although in any ‘community’ roles they are sworn not to represent us directly.
In stormy seas though the crew of the tanker are too busy keeping the ship on an even keel to be able to listen to us. There is always a ready solution offered for us to have more say/influence in events on the larger vessel and that is to be pulled in and boarded to the larger vessel, the more tightly integrated core EU.

You know what the analogy for Brexit is by now of course.

We need to cut the tow lines and set our own course.

There’s a reason we need to do this sooner rather than later.

The longer we stay tethered and find it ineffective to try to control our course, the less we (our politicians) will try. Why expend effort to no good effect? The ‘renegotiation’ showed that we have to reserve our limited political capital for only those things we find most important (to have a small chance of influencing).

Whilst being towed, our political captains (houses of Parliament) lie idle, the crew (civil service) fall out of practice, or busy themselves with more minor tasks. The great machinery of state is effectively running on idle.

Sovereignty

Here we come to the crucial difference between sovereignty and independence. In the above analogy, we had sovereignty all along.  By the powers vested in the crown in Parliament (arcane wording I know and for someone with a deal of antipathy toward royalty they don’t fall easy for me to write), we always retain the sovereign ability to cut the ropes. Always.

However, it is easy to see from the chosen analogy that we cannot act independently whilst tethered.

So, we do retain sovereignty, at all times in our free will to take actions. We do need to cut the rope however for it to be meaningful. Whilst still in the EU we are subject to the treaties and would be taken to the ECJ (European Court of Justice*) if we cut the ropes without first going through the correct procedure.

*the ECJ by the way should more correctly be called the EU Court of Justice but the EU has appropriated the term Europe.

On cutting the ropes/leaving the EU, we regain the full utility of engines, navigation equipment and communication equipment that a state of our size naturally has in the world.

A twitter contact made the analogy that President Obama wants us to stay ‘in formation’ (remain a member of) the EU and that we are betraying our allies if we leave.

We can of course mostly stay in formation.. leaving the formality of the EU does not mean we drift away permanently. We can divert to go around obstacles, some of which affect the crew of ourselves and the tanker, some are uniquely our own problems to solve.

..and Independence.

In the analogy above, sovereignty is clearly the ability at any time of our choosing to notify the tanker that we will be cutting the rope and then to do so.

Independence is the ability to set our own course. Not inevitable that we move far away from the EU ‘fleet’ but we have the ability to head in a different direction to deal with issues, or take advantage of opportunities.

But to regain our independence we must assert our sovereign right to exercise independence.

A problem we face is that the longer the Captain and crew spend without having to control the direction of the ship, the more difficult it is for them to do so if and when they are handed back full control.

So What?

There will be those who read the above and, not being convinced will inevitably think, so what? We give away/share our sovereignty as part of NATO, UN, other global bodies, why does it matter that we do with the EU?

The issue with loss of sovereignty in the EU is that it is so encompassing. NATO is specifically for defence for example and doesn’t come into play unless by agreement or in extremis if one of the members is attacked.

The very fact that there is an EU home affairs committee says it all. Who’s home? Purely domestic issues have no right to be decided from Finland to France to Portugal to Bulgaria. People, quite rightly live different lives in each of the countries. Maybe it’s the libertarian streak in the author that believes I actually don’t have a right to tell others how to live their lives and I actually see it as authoritarian to do so on the scale of the EU28.

Actually, if you look at the Home Affairs web page you’ll see some rather grand things that they claim to do.  I leave it to you to decide if they do but some certainly believe they dont:

Mathew Elliot tweet EU Security

But let us look at some simple examples where the UK has taken a different course to the majority of EU members. The first example if a sensitive subject but please see it simply as a case where the UK had a different approach.

A Different Course

On security particularly, if we don’t cut the rope, what happens if the tanker is holed irreparably (internal strife). There is a current example of this in action.  The UK is one of the highest foreign aid spenders in the EU:

The UK spent $19bn on foreign aid last year, compared to $16bn from Germany and $10bn from France

However, we had a different approach to helping Syrian refugees.  Those given asylum in Britain were to come directly from the refugee camps and be based on need.  This was not an approach that other EU countries seemed to support.  Comments about the number of Iphones taking selfies on the shoreline of Greece are valid because those arriving in boats are the ones who can afford to.  You are not seeing the poor and destitute of Syria arriving because they simply can’t afford it.  Those most desperate are very likely to be stuck in Syria or a neighbouring country, with little or no means to move far from the conflict zone.  Those most in need of assistance yet now Mainland Europe will struggle to help them.

Did you see ‘British Influence’ in action? I didn’t. I saw the UK castigated for lack of action.  We can argue about numbers of refugees taken but this isn’t the point of this post.  UK had/has a fundamentally different approach. There is not (yet) a full common asylum policy though Lisbon made Asylum and Immigration a shared competence, see the following:

..the Court of Justice now has full competence in the field of immigration and asylum.

It is likely that the UK might still want a different policy to the other EU member states when it comes time to change this to a Full Competence.

The U.K., superb ocean-going vessel that she is, cannot support all the people on the tanker with the best will in the world.  Ultimately, we may have to cut the rope to prevent the tanker taking us down with it. UK has already distanced itself from the Euro and its bailout mechanism. If you know the mechanics of that bailout mechanism, you’ll know that it has the potential to sink the Eurozone, as bailed out countries have responsibilities to contribute to the bailout itself:

do we really believe that Italy – a country with public sector debts of 120 per cent of gross domestic product – is in a position to find tens of billions for the bail-out of another member state?

Indeed, I had forgotten that Spain itself received money from the ESM fund (though I thought from its predecessor the EFSF, it appears not):

Spanish Bailout Funding

As an aside, the disaster in the Eurozone might have roots outside the poorer southern nations:

France and Germany who set the worst example, when they broke the euro-zone rules they had forced on others

Also note the ‘broke the rules’ reference.  This refers to the famous ‘no bailout clause‘ originally in the Maastricht Treaty. The EU is a rules based organisation of course, until it’s not convenient for *certain members* to obey them? (UK is not in that particularly cozy club btw).

In Conclusion

Once the UK became separate from the Eurozone, We moved away from the course being set by what should be seen as the ‘core’ EU.  The ropes are strained and for valid reasons, the crew of the Eurozone cannot spend too much time listening to the UK.

The key point to remember is that the UK, in or out of the EU will bring what influence it can to bear but ultimately the direction of the EU is not our choice anymore. Indeed, history has proved that it never was and it is arrogance to think it ever will be.

As leaving the EU is not ‘throwing everything up in the air’ as Stephanie Flaunders stated on the Andrew Marr show this morning, if you have a plan, in my opinion it is the right thing to do for very valid and practical reasons.

Science Part 1 (2019 words)

Thank you for visiting the EUandEurope blog where we examine issues related to the upcoming referendum on UK membership of the EU.

In this post I will be taking an introductory look at the current attitudes to the EU in the British Science community.  An example of this are statements such as the following:

“Dr Galsworthy is highly respected Cambridge scientist representing widely held views in science” (emphasis mine).

Science in Europe is indeed a great success.

Science projects in FP7
Number of Grants received during FP7 Research and Innovation program 2007-2013.

However, if we want to address the need for the EU specifically to run the process then we need to answer the question:

Is political union, as currently practiced in the EU required to achieve the necessary levels of collaboration and funding for Science?

Continue reading

Do Lies Matter? (1491 words)

Welcome and thank you for visiting the blog.

I had penned my next piece about why the governance structure of the EU harms the ability (and importantly) the agility of the UK to act in its best interests and ultimately in the best interests of Europe.

However, there is something more pressing that we all need to confront and decide how we feel about it.

So, in this post I will examine why it matters that David Cameron has lied about the ‘Legally Binding’ deal that he apparently secured in Brussels on 20th Feb 2016.

 

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A view towards the Westminster Council Chambers: A photograph the author took on a recent trip to London (the subject of a future blog post)

Before covering the reasons why the lie matters, we examine the nature of the lie and provide reassurance that it is categorical, not a hypothesis that Cameron has indeed lied

Why it is a Lie

Continue reading

Trade Wars (3000+ Words)

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Welcome to the second post on the blog.

In this post I aim to cover:

Why leaving the EU is a process that includes a negotiation and not a fait accompli, as some believe.

  • Why it doesn’t make sense for the EU to apply tariffs to British exports.
  • The relative health of economies in Europe and UK
  • Predicted crash of the pound
  • Why common sense will prevail

Leaving the EU – The Process

The process for leaving the EU will take some time to execute but it doesn’t take long to read the treaty text that defines the process. A member state leaves the EU by invoking Article 50 of the Lisbon Treaty

Here’s a screenshot of the whole thing (yes, that’s all of it):

Article 50 Text

Reading the words you can see that it clearly states that there will be a negotiation. Some claim however that there will be no negotiation as per the Article 50 text and the EU will simply tell us what deal is available, for us to either accept or decline.

Some also claim that UK representatives will not even be allowed to attend the ‘negotiations’ in which case the EU representatives presumably hold discussions with a row of empty chairs.

Rather than go over every word myself, there are numerous articles covering the specifics. Here’s one by Brexit Blogger euquestion:

http://euquestion.blogspot.co.uk/2016/01/fud-fight-exit-holds-no-fear.html

Article 50 (the EU treaty clause that provides for states to withdraw from the Union):

Art 50.2 makes clear EU negotiates withdrawal with UK.

Art 50.4 – UK continues in EU during 2yrs BUT when EU council business covers UK’s withdrawal, UK leaves room (makes sense, we don’t expect EU to sit in on UK teams discussions on withdrawal process).

And referenced by other bloggers:

  • – Lucy Thomas, Business for New Europe corrected by blogger The Boiling Frog
  • – Bronwen Maddox in Prospect Magazine corrected by blogger The Brexit Door
  • – Fraser Nelson in the Telegraph corrected by blogger VoteToLeave
  • – Kinnock & various others corrected by blogger Lost Leonardo

The Negotiation

I am told that in the case of UK leaving the EU, that the EU will have ‘the whip hand’, and will tell the UK ‘what the deal is’ and that tariffs will be automatically applied to UK exports to the EU if we don’t accept.

Let’s tackle the first claim:

The EU will decide what the deal is and offer it on a take it or leave it basis.

fait accompli

For there to be no negotiation with the UK whatsoever, the EU would have to be in a position where it either wanted nothing from the UK as part of the deal, or it felt that it was in such an overwhelmingly strong position that it had to offer no concessions. I’m discounting a situation where the EU put together a package that perfectly matched our requirements and we simply accepted it as it had everything we want.

To understand why there would be a desire for accommodation on both sides, we need only examine some simple facts of economics. Firstly that international trade is not an activity that favours only one party and in an open trading situation, benefits accrue to both parties, certainly between advanced economies. There is also the fact that the EU’s own policies promote free and open trade with close neighbours.

One proponent of the EU ‘whip hand’ position has a blog post in which I can find statements supportive of this case, although I’m sure this was not the intention of the author.

In the article you can find a statement referencing ‘Mutual beneficial trade with the EU’. Reinforcing the point about trade being a benefit to both parties.

The post does highlight what is described as a fallacy, that ‘The EU will still trade with us after brexit because we buy more from them, than they from us, we are in a position of power.’ It’s not quite a fallacy, more a misunderstanding. As I am describing, a fair and equitable trade agreement will be reached because it is in the interests of both the UK and EU. More reasons for this shortly.

Any trade deal with the EU must address the question of Tariffs. A repeated claim is that:

The EU will do nothing but apply the tariff to British goods once we are outside the ‘Tariff wall’ and why would they do anything else.

For any who don’t know, a Tariff in this context is “a tax or duty to be paid on a particular class of imports or exports”. The European Union applies Tariffs across a raft of goods and services. You can look up rates for particular product types on the Taxation and Customs Union website if you are ever bored one evening.

As an example, I found that a 16% tariff applies to Third country imports of passenger vehicles of 10 persons or more. Clicking a link to the relevant regulation 2261/98 of 26 October 1998 took me to a 969 page document.

An extreme example perhaps but it shows what a nightmare it would be to have to a) pay tariffs of up to 16% on (in this case) passenger vehicle imports and b) have to wade through 900+ page documents to ensure compliance before trying to import vehicles into the EU.

Full application of tariffs depends on there being either no agreement to either limit them or maintain tariff free market access. There is a whole set of WTO rules that are pertinent here. That the EU is an RTW, Regional Trade Area, rules around MFN, Most Favoured Nation, Technical Barriers to Trade that need an MRA, Mutual Recognition Agreement etc. This post is not going to cover that in detail but I see that it was covered recently by The Brexit Door

I would like to ask the following question as I think it is key to understanding the dynamics of any trade negotiations following any Leave vote majority and commencement of Article 50 negotiations.

Can the EU impair the UK economy (via the allocation of Tariffs) with impunity?

My point here is that, although in relative terms the U.K. economy relies more on EU trade than the EU does on UK trade, applying tariffs will harm the UK’s economic performance and hence reduce our capacity to import EU goods and services. This in turn harms the EU economy, although not evenly as UK will import more goods from certain EU member states than others.

Hold the answer in mind anyway and let’s see what the EU’s own treaty articles say about subjects related to trade policy.

Links to the Treaty articles on international relations, diplomacy, the EU’s own neighbour policy:

Articles 3.5, 8, 21.2 which commit the EU to maintaining good international / neighbourly relations based on co-operation.

EUPeons view: No. None of that. Not happening. At all. Ever.

The fact is, the UK offers a lot to the EU that they would want to retain access to after Brexit that is not related to trade. Collaboration and funding of science, security (Royal Navy ships were described as the EU Navy as far back as 2012 and there is an EU Website which describes the ‘EU Naval Force’) and taking a few more statements from the blog I referenced earlier:

“good sign of rebalancing global economies and continuing world progress and harmonisation.”

What do most Brexiteers say about looking outward to the world… They’re like a broken record!

“We in the West have had it our way far too long, while whole continents suffered in poverty to feed our greed.”

Brexiteers want UK to take its place in the world as a free trading, wealth generating partner, competitor, ally, etc.

Now, remind me again who sits behind a tariff wall designed to make others’ goods more expensive and internal producers protected from global competition? Just read about Africa.

Quoting from euquestion blog again:

“Having brought catastrophe to the UK’s fishing waters, the EU’s predatory fishing practices are also devastating the African fishing economy, causing mass economic migration from West Africa to Europe. Similarly, the EU’s trade policy is severely impacting Africa’s agriculture and their ability to develop their economies. In Oct 2014 the EU imposed a tariffs on Kenyan cut flowers to “persuade” a reluctant Kenyan government to sign the Economic Partnership Agreement (EPA) trade deal, which means underdeveloped East African economies have to try to compete directly with Germany.”

I’m not suggesting BTW that UK opens itself so completely that it is a global race to the bottom. Our heavy industries have suffered hugely due to globalisation and we haven’t a hope to compete in labour intensive activities in all sectors though our car manufactures, albeit foreign owned do very well. Nissan Sunderland acknowledged to be Europe’s most productive car plant and astonishingly, I read recently that it makes more cars than Italy

Overall UK is still a big player in manufacturing, the 11th largest manufacturing nation in the world.

Our services do quite well also. Discussing Brexit with a colleague recently he made the incorrect statement that we don’t manufacture anything any more (see above). I asked him where he thought UK stood as a provider of services. He guessed 25th place. When I told him that the UK was the world #2 in provision of services he nearly fell of his chair. That’s without there ever having been a complete single market in services within the EU. Maybe I need to look up tariffs in services!

Side note: who is the single biggest services provide in the EU & why is the single market in Services not complete? #Influence

Back to the negotiation, presuming the British delegation is not the aforementioned row of empty chairs.

To recap: As we have stated, Article 50 of the Lisbon Treaty defines a period of… Negotiation. Quelle surprise, Mon ami!

Now, that may end up being two years spent sitting across the table from a stony faced Frenchman with his arms crossed, who repeatedly advises you that the tariff is the tariff and there’s nothing else to say. At least you’d get to drink some coffee and eat some nice pâtisseries et macarons etc.

Empty Chairs Small 24204696032_a798910212_z
EU Negotiations?

This is a key area that causes confusion because some people have the idea that the ‘negotiation’ is simply the EU working out what you can have and just telling you and that this is what is intended by the wording of the treaty article.

This is based on confusion about the leaving party not being part of the commission’s ‘discussions’. In reality it simply means you can’t sit on their side of the table and you can’t join the room when they want to discuss things among themselves. Not complicated really.

So why would the EU negotiate in good faith? Consider the statement from the blog post we are referencing:

“The next time a kipper tells you the EU’s economy is shrinking remind them only Finland and Greece have that problem. The rest are growing fine”

I might pick on the ‘growing fine’ comment because growth has to exceed inflation to be positive in real terms. However, as the EU (generally I think or maybe just the Eurozone) is in deflation that might not be an issue.

Lets look at the growth figures:

Source: World Bank

All growing fine yes of course nothing to see. Remember that certain economies will be contributing more to that growth than others, so it is not distributed evenly.

Now, moving on: ‘UK in no position to preach.’

Agreed but it is not about preaching. I’ll be totally honest about the UK economy… It’s crap. Huge deficit and a debt mountain, poor productivity, debt and property boom fueled ‘growth’.

So when our blogging friend puts out graphs of UK sovereign debt with a sword above it, it’s predictably horrific. I don’t disagree, never do. Why would I as I’m not in the habit of embellishing or lying.

However: UK Sovereign debt is not unique in Europe:

Eurostat_Graph_teina225

Do you notice who sits next to the UK in the debt table. Yes our great friends France.

The author of the blog just happens to live in France but only ever draws attention to UK national debt. He did this before starting to complain about loss of value of the pound.

Predicted crash of the pound.

This is a prediction I have relayed to me frequently now the referendum date is fixed. This is an area where I can only presume EUpeons of all stripes are blinded by the success of their 17 year old currency.

I make the same point each time. A nation’s currency (in a floating fiat currency system at least) should reflect: Currency trader’s confidence in the productive capacity of the nation, confidence in the sitting government to manage the state’s finances successfully and the risk of the nation defaulting on debts and/or devaluing its currency. Also other factors such as the level and likelihood of high(er) inflation.

So. The level of the UK pound will be set by the market, which is of course a tough master.

IT should be remembered that artificially supported currencies allow governments to borrow too cheaply and overspend. Remind you of anyone… Greece maybe?

So I maintain that in the longer term, a true reflection of the value of the pound is a good thing (providing short term volatility can be managed and the whole of the UK economy doesn’t collapse of course).  Basically a floating currency (generally) keeps a government more honest and constrains excessive borrowing (I know, I know).

When the pound dropped out of the ERM (Exchange Rate Mechanism) in 1992 after being pegged artificially (and too high) against the mighty Deutsch mark, the U.K. Economy recovered nicely, leading to the event becoming known as White Wednesday.  No guarantees of that being repeated in current circumstances of course and the dynamics of the world economy have changed somewhat.

So, problems all around, UK economy not looking great but neither does the EU27 (as I might now refer to the remaining member states after Brexit if it happens) particularly if you include unemployment levels, especially youth unemployment . Any conclusion we can draw?

YES. Who wants to impair the economy of either the UK or the EU by unreasonable trade conditions after Brexit?

The truth is, neither party can afford it.

One last point. A particularly rich piece of irony.

I again quote from the blog post I have been referring to: “Not trade that exploits their natural resources and dumps unwanted manufactured goods”

Substitute agriculture products for manufactured goods in the quoted text and who could we talking about? Yes, our friendly supranational state in the making who dumps subsidised food on the world market harming developing nations, particularly Africa. (See earlier references)

Another Gem. (It’s really worth reading the whole of his blog and I am by no means stating that all of it is wrong. Here’s the link again if you need it.)

“EEA countries follow EU rules, pay for the privilege, and don’t vote for any of it.”  Oh dear, a variation on the ‘Still pay, no say’ fallacy.

Well here is one of my absolute favourite eureferendum.com blog posts, along with the text that I quote when I (frequently) post it on Twitter:

Norway, “Has more power than any member state”

http://www.eureferendum.com/blogview.aspx?blogno=85902

Also a post from White Wednesday’s blog (named after the ERM lucky escape mentioned above) about Norway’s position, rebuttal and list of links at the end.

Conclusion

This is a variation on ‘we buy more from them than they buy from us’.
The deficit (difference) in goods and services in favour of the EU is not really the figure we need to be looking at.
The important figure is actually UK sales into Europe. The £230 billion of goods and services to other EU member states Source HoC Briefing Paper, In brief: UK-EU economic relations.
Now picture the damage done to the U.K. Economy by the application of the aforementioned tariffs. So what if applying tariffs damages UK economy, that doesn’t harm EU member states’ economies, you may think, if you haven’t thought about it at all.
Picture the impairment to the EU’s ‘biggest customer’.  Add in apocalyptic warnings about trucks backing up the M20 because we don’t have a formalised goods inspection regime (Mutual Recognition Agreement) which means goods need to be inspected on entry to the EU (actually the EEA). Mountains of ‘paperwork’, delays, costs etc.  Those delays will impact shipments both ways, basically the whole system could, in extremis, snarl up completely!
We are talking about incalculable damage to the British economy. Therefore we are talking about significant damage to the £289 Billion (~365 Billion Euro) of sales that the EU member states make to the UK.
No one can afford to have a recession caused by intransigence on the part of the EU, so talk of a take it or leave it deal that the UK may ultimately reject, is nonsense of the highest order.  Using an analogy that is often used by EUpeons… Why would the EU shoot itself in the foot in such a way?
With the fragile state of economies across Europe including UK, I believe this is the compelling reason that the EU and UK will come to a comprehensive agreement on trade and the U.K. will not fail to agree a deal and revert to WTO default arrangements with all the dire consequences that entails.
As to the exact nature of the trade agreement? Well that’s a different discussion. The options are spelled out in the only comprehensive plan for Brexit, see Flexcit on the Leave Alliance site.

That’s all.

Hopefully the information provided here can prompt some thought about how UK and Europe can come to an accommodation to the benefit of both parties following Brexit because it is certainly required.

Lastly, I’d like to thank Brexit blogger Paul Reynolds at the euquestion blog, (Twitter @paulrey99) for supplying many of the links and images used in this blog post. Also thanks to the bloggers who I have linked to for other material.

Thank you for reading.

The List (1100+ Words)

Welcome to the Blog!

This first post simply sets out where I started in my journey from being completely ignorant though concerned about the impact the EU was having on the UK, to deciding to take action on the matter now that we have the impending EU referendum.

Hague Mosaic
A selection of my own photos taken in The Hague, Holland

The following is a list I wrote some time ago (actually in an email to a University Professor).  Not all of it will be correct but worthwhile I think to list all of my original points as they represent the views of a layman. Some of the points are in response to particular points the Professor and I discussed so may lack some context, however just view it as a brain dump and it makes more sense.

I have also been challenged by more than one Twitter user to list the ‘reasons why the EU is so bad’ so this will suffice as a starter for ten.  As I took this from an email sent to an EU supporter, it is written in that style.  Think of it as a message to you if you are an EU supporter.

The List

Following are the things I could think of that concern me about our current membership of the EU.  I am simply a lay person who has come to realize that this has a huge impact on my life and that of my children, fellow citizens (of UK) and that I needed to learn more.

Why is the EU different to the United Kingdom? Why is it important at all where borders are drawn?  A persons sense of belonging to group and nationhood is a very complex area. Subject to emotion of course but also rooted in entirely practical considerations, some of which I list below:

Legal system: Habeas Corpus vs Corpus Juris, a fundamental difference. Simple practical example: outlawing of people harvesting/sharing seeds from domestic plants that are not approved in EU law.  Basically, UK law says: ‘these things are prohibited and you will be punished if you do them’. European law says ‘you may only do that which we have explicitly allowed’. Being a generally ‘law abiding’ citizen I do not submit to being controlled to that extent. Talk about human rights?

A completely different basis of the legal system alone illustrates the fundamental difference between UK and EU. You won’t hear Nick Clegg or any other EU cheerleader pointing it out though.

Being entered into the EEC in 1973 based on a huge deceit: that it was only a trade agreement and that “there is no question of Britain losing essential sovereignty” in the words of Edward Heath. Note how he described sovereignty as essential.

More on Heath.

Heath of course knew this to be untrue as it is made clear in the treaty of Rome (dated 25th March 1957: “DETERMINED to lay the foundations of an ever closer union among the peoples of Europe.” (Emphasis theirs not mine). In fact that is the very first statement in the objectives.

Heath was advised by civil servants in the Foreign and Commonwealth office that it did of course mean a loss of sovereignty. This only came to light after the 30 year rule and the documents were released to the public.

You want to cheer lead for a situation based on lies which has so many damaging effects on UK citizens and leads us further towards a world where a small number of government officials wield ever increasing powers and citizens of whatever nation/region they are deemed to be members of have a vanishingly small meaningful democratic influence?

Being subject to extradition to any EU nation with no prima facie evidence being required. (European Arrest Warrant, EAW).

Loss of influence generally e.g UK seat on WTO, ceded to EU.

UK budgets subject to approval by Brussels.

Ruled by politicians who are discouraged from criticizing EU which is essential for effective democracy.

Loss of control of the population size in UK. Not in a general sense but a literal one due to free movement, immigration pa is ~8.5%).

Being one of only a few countries that are net contributors to the EU (9 out if 28 in 2010 e.g), UK being the 2nd highest. Do you think those that take from the EU have the same interests as those that give?

Waste of funds provided to the EU. For public projects (Cohesion Funds) I have personally seen gold plated provision of leisure facilities in France with EU flag liberally displayed to make clear to people that they can get ‘money’ from the EU (those net contributors again). Actually is it making them feel dependent on EU which of course suits the EU leaders. It is insidious as we are being bribed with our own money.

On an emotional level the difference is the commonality I share with British/English (I’m actually Welsh born to an English father/Welsh mother but I live in England). I have worked abroad (in Europe) and have friends who live in continental Europe.

Giving away fishing rights.

Subsidizing French way of life by supporting their farming system, which is very different to UK farming (and has been since before 1973).

Supporting/paying for a huge bureaucracy with an extremely small amount of power to influence the outcome.

Before you conclude that I am a little Englander, please know that I am well traveled, personally and through work. Adore France and the French (but not French government). Love experiencing different cultures, languages. Love to welcome foreigners to visit and experience UK. I am not xenophobic in any way shape or form. Hopefully you can see that my position is principled and fact based.

If nothing else I appeal to you on an intellectual level to view the EU in a wider historic sense, certainly not simply from a post 1945 perspective and see if you can hold to your position that it can ‘only be a good thing’.

End##

Not a comprehensive list by any means and it was simply what came to mind at the time.

I intend to pick up on each of the items raised in the list and research/write a blog post about it. Note, trade wasn’t one of the items, neither was ‘how the UK can do better outside the EU’, whether true or not.

A recent item of interest is recent legislation from the EU on the legal Presumption of Innocence.  Some interesting Analysis by EU Law Analysis: Presumption of Innocence

Strange that in the 21st century, such basic legal provisions need to be legislated for by the EU?

But what about our Human Rights?