Friday, 18 August 2017

Really Stupid Pt 2

One of the problems with being an amateur Brexit blogger is that I just can't keep up with events.  Brexit logic may have a 9 month cycle but on top of that it is plagued by a high frequency signal  that is basically just noise to the ear of a rational human being.  Monday might bring a leak that the UK is going to ban chemically washed chicken, then Tuesday might inform us that we're going to buy a job-lot of disinfected poultry with the loose change from our £40 billion exit bill.  It all just moves so fast. Sometimes this blog is like watching the football highlights from two weeks ago - all the drama of the moment is forgotten and all you've got left to enjoy is a grim sense of life ebbing away and footage of some overpaid idiots running around a grass rectangle.  This is one of those sometimes because today's post is a delayed review of the UK government's proposal for the Northern Ireland/Ireland border.  Enjoy.

What does the UK propose?   Let's start with the good news.  The UK intends to maintain the Common Travel Area.  This is a historic agreement between Ireland and the UK that basically bestows the kind of rights that the EU would eventually bestow upon its citizens.  In fact, those rights go far beyond the EU because it includes voting rights and fewer conditions on benefit claims or residence.
  • the right to enter and reside in each others’ state without being subject to a requirement to obtain permission;
  • the right to work without being subject to a requirement to obtain permission;
  • the right to study;
  • access to social welfare entitlements and benefits;
  • access to health services; and
  • the right to vote in local and parliamentary elections.

Is there any more good news?  Well, it does provide quite an interesting history lesson.  Did you know that in 1972 only 17 of the 200 border crossings were approved for vehicular traffic?  The border was such a dangerous place (bombings, shootings, violence) that it had to be policed by armed guards and watchtowers.  The Good Friday agreement of 1998 removed all signs of the border and paved the way to relative peace.  Although the EU wasn't directly instrumental in striking that agreement, the border arrangements brought about by EU membership helped to make it possible. I've even crossed the border myself a few times and the only visible sign of change is that the road signs change from kilometres to miles per hour.   

I don't want this blog to just be the bearer of bad news so I'm going to stay with the positives a bit longer: there are no plans for passport checks at the border.  The rights of travel for Irish citizens will, of course, be covered by the continuation of the CTA.  It looks as though the UK government is not going to require visas for EEA visitors because they seem happy for EEA citizens to cross into the UK through Ireland. Interestingly, they don't really say much about the rights of non-EEA visitors to cross the border.  It seems highly unlikely that Ireland and the UK will align their visa requirements for non-EEA so this is a bit of a loose end that does need tying up.  It strikes me that anyone with rights to travel to Ireland but not the UK can now just enter the UK through Ireland.  Eventually, someone without a UK travel visa is going to commit a crime in Basingstoke and Tony Parsons is going to blow a gasket.  This is actually quite serious because taking control of the borders ought to mean exactly that but now the government is basically letting the Irish government control entry to the UK.  This might be a very real problem but it's not even in the top ten on the chart of shame.

Let's move on to the bad news.  When the UK exits the EU it will no longer be in the EU Customs Union.  As a consequence, we might expect that the Irish mainland border will start to look like the rest of the EU's border. What does that look like?  Well,  I've blogged about this a few times because I regularly cross the EU's border with Switzerland.  It basically look like any other border on the EU's periphery:  there are manned checkpoints on major crossing points;  temporary checkpoints and random checks on minor crossing points, and very occasional checks on trains.   If you're crossing the border in a massive truck laden with delicious cheese you'd better have your dockets ready because you're going to need them.  A family car on a minor crossing point might get stopped but, then again, it might not.  You're highly unlikely to be stopped on a bicycle or on foot but the risk is always there. Switzerland is in the Schengen area so all that checking is performed to maintain the integrity of the tariff regime. We might expect that kind of border to appear at the NI/Ireland interface but the government aren't proposing any of that because they have permanently taken leave of their senses.

They're an experimental lot at Brexit HQ because they are very keen on the words "unprecedented".   I can hereby declare that their proposal is certainly unprecedented.  It is also unhinged, unworkable and unstable.  David Davis proposes that the EU basically ignores the border altogether.  Yup, let's all pretend it doesn't exist even though it does. He basically says that small traders should be allowed to move goods freely across the border without any regard for differences in tariff regimes.  He then says that large traders should register as trusted businesses and we'll just trust everyone to pay their tariff charges at their leisure.  Once all that is in place the border will continue with zero border infrastructure, zero guards, zero watchtowers, zero cameras and zero checkpoints.  This is a mad fantasy and the rest of this post will be devoted to tearing down the hapless plan until it keels over from the weight of shame.

The problem can be summed up in one word:  arbitrage.  Any time there is a price discrepancy in any commodity across the border it encourages cross-border trade in that commodity.  That price discrepancy might be due to currency fluctuations or it might be due to tariff policy.  If there is an open tunnel across the border it will allow cheap goods to flood either country against national policy.  That counts for small traders just as it does for large ones.  Did you know that the Swiss actually made attempts to control the cross-border traffic in German pizza delivery companies? They need to do that because Swiss pizza is much more expensive due to the high value of the Swiss Franc. All it took was a few complaints about foreign pizza imports and its effect on the economy of border towns and something was done about it through the enforcement of tariff payments.  That's right, even small businesses can build up political pressure at the border.  Big business is another story altogether.  The UK has repeatedly threatened to turn itself into a low regulation, low tariff, low tax economy.   That seamless border will be an open target for smugglers to exploit the border by sneaking cheap steel and oil and anything you want to mention into the EU.  The key point is that once it crosses to Ireland there are no further checks anywhere in the EU.  It works the other way, too.  Jeremy Corbyn might want to increase steel tariffs to help Welsh steel workers.  There's no point doing that if cheaper Chinese steel can flood in from the EU.  To be honest, most things involving Corbyn have no point.

David Davis is basically asking the EU to significantly weaken its border and undermine its long-term economic strategy for absolutely nothing in return.  He is asking the EU for a massive favour just because the UK finds itself in a hole.  He is asking the EU to trust the UK, even though the UK is facing a £2 billion fine for repeatedly failing to uphold EU regulations at its own ports.   The best outcome for the EU can only ever be that it is not as good as it is today.   It is not an attractive proposition.

Can it get worse?  Yes, it can.  What about the prospect of hormone-injected beef from the US winding its way to Munich all the way from Munster?  Well, Davis has thought of that.  He says that the UK will mirror all of the EU's agri-food regulations.  Well, he can wave goodbye to a US trade deal if he does that.  Does the border have a magical agri-food filter?  No, it doesn't. Chemicals and nuclear material and paint and toys and inefficient vacuum cleaners will also want to cross the border.  The UK will need to mirror all legislation on pretty much every possible commodity category.   Davis doesn't explicitly mention any of that but that's what he'll have to do. He can wave goodbye to any trade deal with anyone with that kind of legislative weight on his back.  Did someone mention live animals?  Chickens and horses and animal disease can all cross the border.  Disease control and the EU Directives and Regulations that uphold standards of disease prevention aren't even mentioned. Can it get any worse?  Well, who is going to monitor all this?  The ECJ will quite clearly not be involved.  I think he is just asking Barnier to take the UK on trust.  Why would the EU agree to any of this?

It turns out that taking back control means giving up control.  Brexit means that the UK lets Ireland decide who gets to travel through its ports.  Brexit means that the UK gives up any attempts to pursue its own macro-economic policies. Brexit means that it is locked into EU regulatory standards in perpetuity without any say in those standards.  Brexit means that it is unable to sign its own trade deals because of the inherent loss of political freedom and power.  

The government's position paper tries to solve an intractable problem.  It is well written and contains all the references and caveats of a real position paper but it is actually 3 pages of logical fallacy and logistical nonsense fluffed out with 27 pages of waffle.  The EU is simply not going to agree to significant disadvantage in return for literally no gain.  Even the UK could not maintain the seamless border because borders are specifically designed to maintain regulatory and economic difference.  The only way that a truly seamless border is possible is by enforcing political convergence.  If only there was some kind of way to organise that across the whole of the European Continent. If only.

Over and out,

Terry

PS It looks like Davis is trying to resurrect the "row of the summer" over the sequencing of the talks.  He makes the point  pleads several times that progress will be faster with parallel talks.  Is he an idiot or is he playing to the press gallery?  Answers on a postcard. 








14 comments:

  1. I've come to the conclusion that it is insoluble.

    It would be impossible for even a smart government to reach agreement that will satisfy the demands of the "take back control from foreigners" brigade, and the Irish, on all sides, who require that open border, not just for trade, but for peace.

    And now remove the word "smart" from the equation (because they are anything but that) and where does that leave you?

    The problem is that there needs to be a solution. And it needs to come in the next 12 months or so. It can't sit around on ministers' desks like fire safety reports, until a tower block goes up in flames. It MUST be addressed and a solution found.

    Normally a compromise is the answer, but you either have a border or you don't, and all this electric stuff isn't going to cut it. A non border will mean that everything and anything can pass through it, and the only way to make that not matter is to be in the customs union and the free market and accept the four freedoms... and the ECJ. The words "heart" "Farage" and "attack" spring to mind.

    Any notion that we could trust big business to do the right thing is also farcical, even for the British Tories. Where did David conjure that up from? No one believes that there wouldn't be massive fiddling.

    If you couldn't laugh at it, it would be quite frightening.

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    1. There is no solution without accepting that their trade-offs for every decision. Nobody seems to accept or even acknowledge this simple point. They are hell-bent on getting what they want without realising that every change has consequences somewhere else down the line. They've also spent the last year convincing the public that their goal is a readily achievable goal.

      Like you and everyone else here I can't see how this can end. I don't see a solution on the horizon. Perhaps the EU have something up their sleeve? Lots of commentators like Ian Dunt think that the UK will eventually capitulate to an extended negotiation period that is effective membership without democratic representation. It sounds plausible but how will the headbangers in the Tory party react to that? Even if we get there it has only kicked the can down the road.

      The border idea is quite fanciful on so many levels. Davis is really asking the EU to completely ignore the border. The lack of detail really made that clear to me: the entire plan is actually condensed in just a few paragraphs. It really does all depend on the EU agreeing to give up control of their own border. That is unlikely to happen. The only solution is for the UK to painstakingly reconstruct its current EU relationship in a new agreement. Davis thinks he can do that in a very limited way but he just hasn't thought far enough to see that there is always another case that needs legislation. I suspect the EU will need full reassurance on everything. What is the point of that kind of relationship? All that effort and risk for something that is almost identical to the original version but not quite as good. It won't even satisfy the Brexit faithful because it will extinguish their beacon of global trade.

      It is all starting to become quite serious. All of the lies and fantasies are finally being exposed but not in a way that is shifting public or political opinion. Some kind of King Canute madness has taken root. Eventually, this might really become a serious constitutional crisis. Somebody in power needs to start facing this down and preparing the public for the actual reality on the ground. Corbyn certainly isn't going to do that.

      are becoming very real.








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  2. Kangaroo says
    Could Norn Ireland become independent and be in the EU. This would solve a lot of the issues without giving either the yoons or the nats what they want. In fact it forces them to work together for common benefit.

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    1. It certainly could. Is there an appetite for that? The DUP seem quite keen on remaining in the UK but they are only one party. I'm also not sure that Brexit HQ would be happy about the break-up of the UK. It would certainly solve a lot of issues and is actually one of the most sensible ideas I've heard. It's just a pity that common sense doesn't apply.

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    2. It would create a dangerous situation. NI a member of the EU, in receipt of grants and prospering, while Wales and Scotland suffer the consequences of Brexit. How long would it be before Scotland and Wales were also independent in Europe?

      And Gibraltar, small though it is, is another problem along the same lines. Could it be an independent state?

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    3. If Malta can be an independent state then Gibraltar could be one too. I get the impression, though, that the residents of Gibraltar are extremely keen to stay British. They're also keen to keep that border open. It's another one of those Brexit conundrums where there is a clear choice to be made but it is never, ever framed that way. If they don't seize the initiative the decision will simply be made for them.

      There is something very colonial about the forces of Brexit. The way it conjures up false visions of the Union and romanticises the lost empire is quite disturbing at times. And here's another conundrum: those very forces of nostalgic nationalism that led to Brexit are driving the Union apart. Which would they choose? Preserve their blessed United Kingdom or make their warped dreams of autonomy a reality?

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  3. Scottish Independence campaigners should be paying attention to the NI border proposals and post-Brexit issues. The assumption in the previous campaign was that the iScot/rUK border would simply be a replication of the Eire/NI border.

    Well, it might still become that. But if Brexit does ultimately result in an unified Ireland, those border issues will be removed from that table. They would still be on the future rUK/iScot negotiation table - and without an Eire/NI border "solution", would be a bigger problem than it would've been last time around.

    The onus to come up with a workable solution would then be upon the Scottish Government and the Yes campaign. If the only workable solution turns out to be a hard border, the arguments in favour of that will then have to be put to the electorate.

    Ideas on a postcard?

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    1. That's a really good point. The border is a really serious issue because rUK isn't going anywhere.

      There are just so many possible scenarios and each has their own solution. Having said that, I think we can identify the two extremes of the spectrum and see where they take us.

      a) rUK hard Brexit. The border can only be kept truly open with EEA membership so that Scotland can sign a FTA with rUK. That would likely also involve EFTA membership.

      b) rUK soft Brexit with all but effective membership of EU Customs Union and EEA. An open border and EU membership might still be possible but it's hard to really say. EEA membership and a FTA obviously still work here. EU membership really depends on how the EU consider the Irish mainland border and what opt-outs rUK negotiate. We'll need to wait and see but I don't think the EU would look kindly on a new member asking for special favours with the most basic obligations.

      My postcard would probably tend towards EEA, EFTA and a rUK FTA. Scenario a) looks much more likely than b). Also, neither guarantees EU membership *and* an open border. It's interesting that the red line of the Scottish governemnt's White Paper on Brexit was EEA membership for Scotland. Could that be a hint of SNP thinking?

      We don't talk about this enough.

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    2. Alan, I don't really view the iScotland/England border in the same light as the RoI/NI border. Trade across the border is one thing but everywhere Russia borders the EU that issue is dealt with just fine so iS/E can achieve that as well. The Irish border situation is about peace & the symbolism of the open border matters a lot more so than practical realities of a hard one would.

      Perhaps Yes/SNP should make it clear that independence & EU status are not one & the same but that is skirting dangerously close to the murky waters of describing what form iScotland will take rather than keeping to the simple message that independence is good for Scotland & the Scottish people have a right to determine their own futures, perhaps featuring a hard border with rUK, perhaps belongibg to EFTA rather than the EU or perhaps something else entirely.

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    3. I'm not sure what the best political message might be, to be honest. I'm not a politican or a campaigner so I really have no clue. I can only point out here that the border will be a very real problem. Even at the last indy ref the border became a hot potato with lies about hard borders and passport checks. Despite easy rebuttals this idea was hard to shift. It probably persists to this day. This time around, the border is far, far more complex. The need for some kind of monitored border is now the reality rather than a fiction if the message is EU membership. Voters are right to ask about this kind of issue and the No campaign will exploit that.

      I'm going to say something quite controversial now but I don't think that all paths after independence are necessarily better than the status quo. A customs and passport border with rUK and no meaningful relationship with the EEA would likely be economically worse than today's situation with or without Brexit. For many this would be a terrifying prospect with unbelievable risk attached. It may be an unlikely and avoidable scenario but if I was campaigning for No that's the kind of outcome I'd try to place in people's minds.

      I guess I'm saying that being truthful with the facts and understanding the range of outcomes is important. Most of that range offers nothing but positives but it will be hard to present it in that form if BT can start banging on about the border again.

      I completely agree with you that people should vote for independence rather than a specific form. Arguing about the form is quite unproductive, as we've seen in the last few weeks. Many forms are available and the choice should be for the people of Scotland after choosing independence. Having said that, to get that far it requires majority confidence that desirable forms are also achievable and that undesirable forms are easily avoided.

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    4. Hugh, it now comes down to broadly three options for the iScot/rUK border.

      a) Stay in the same trading bloc as rUK to maintain border status quo, as it leaves the EU. This entails bowing to Westminister-negotiated trade deals and immigration controls with even less representation than we have currently - sounds familiar?
      b) Scotland in EU. Will require a customs border with rUK, assuming it's out of the EU.
      c) iScotland outside of EU, with its own WTO schedules. At that point, Westminister will have absolute, final authority over their side of the border, the EU will have no obligation to support us in any disputes and I am not so sure Westy will play nicely. They actually care less about the north of England than they do about Scotland.

      Russia and EU border no problems?

      https://www.rt.com/news/376347-latvia-migrant-fence-russia/

      https://www.thesun.co.uk/news/3845160/four-british-lads-arrested-for-invading-russia-after-they-hop-over-waist-high-border-fence-to-have-a-beer/

      http://www.reuters.com/article/us-russia-estonia-idUSBREA1H0QN20140218

      Rubbish. We can't ignore those issues this time around - with the rUK out of the EU, several pros of independence have become cons, just as several cons have become pros.

      The only way I can see to mitigate some of those border concerns is for the Scottish Government to start building up Scottish ports and looking at establishing significant freight and ferry routes between Glasgow-Dublin and connecting Aberdeen and Edinburgh to continental ports directly.

      Completely free - as in no visas, no border stops, no passports required - travel into England? I think that's off the table now and we have to act on the assumption that it is. The only thing we can take with reasonable confidence is that IF Northern Ireland stays in the rUK and iScotland joins the EU, the NI border solution will be the only 'off-the-shelf' option. We won't have time to fanny around with lovingly handcrafted bespoke super special agreements.

      To do otherwise would be as irresponsible as the morons who were in charge during the EU referendum. And now.

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    5. I'm a bit more optimistic about the rUK/Scotland. I don't see any need for a passport border, mainly because I don't see any need or enthusiasm for Scotland to join Schengen. Moreover, the NI proposal implies that EEA visitors will not require a visa. If Scotland keeps its visa requirements broadly in line with rUK there will be no reason to even thinking about having a passport border. rUK and Scotland can easily agree about this.

      The customs border is harder. It's a bit up in the air at the moment but there are still options available that would keep the border completely open. The problem is that the solutions all depend on the relationship that rUK strikes with the EU. It's fair to say that Scotland will be responding to events rather than shaping them if it wants to keep the border as it is now. It's really, really hard to see through the fog at the moment.

      I also don't want to see a repeat of Brexit. For me, that means clear options are presented and understood.

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  4. Replies
    1. Sadly, he's our idiot.

      I would really love to get a copy of David Davis' business book (https://www.amazon.co.uk/gp/offer-listing/1870555023/ref=sr_1_1_olp?s=books&ie=UTF8&qid=1490613396&sr=1-1&keywords=how+to+turn+round+a+company). Apparently, it reveals his negotiating prowess gained from the sugar industry. I bet it is full of nuggets of his idiot wisdom.

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