Brexit. Why do Brits want Out of the EU?

UK may face seven-year wait for frictionless trade under WTO rules if it crashes out of EU
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It has been claimed that the UK could simply move to WTO terms if there is no deal with the EU. But Anneli Howard, a specialist in EU and competition law at Monckton Chambers and a member of the bar’s Brexit working group, believes this isn’t true.

“No deal means leaving with nothing,” she said. “The anticipated recession will be worse than the 1930s, let alone 2008. It is impossible to say how long it would go on for. Some economists say 10 years, others say the effects could be felt for 20 or even 30 years: even ardent Brexiters agree it could be decades.”

The government’s own statistics have estimated that under the worst case no-deal scenario, GDP would be 10.7% lower than if the UK stays in the EU, in 15 years.

There are two apparently insurmountable hurdles to the UK trading on current WTO tariffs in the event of Britain crashing out in March, said Howard.

Firstly, the UK must produce its own schedule covering both services and each of the 5,000-plus product lines covered in the WTO agreement and get it agreed by all the 163 WTO states in the 32 remaining parliamentary sitting days until 29 March 2019. A number of states have already raised objections to the UK’s draft schedule: 20 over goods and three over services.

To make it more complicated, there are no “default terms” Britain can crash out on, Howard said, while at the same time, the UK has been blocked by WTO members from simply relying on the EU’s “schedule” – its existing tariffs and tariff-free trade quotas.

The second hurdle is the sheer volume of domestic legislation that would need to be passed before being able to trade under WTO rules: there are nine statutes and 600 statutory instruments that would need to be adopted.

The government cannot simply cut and paste the 120,000 EU statutes into UK law and then make changes to them gradually, Howard said. “The UK will need to set up new enforcement bodies and transfer new powers to regulators to create our own domestic regimes,” she said.

“Basic maths shows that we will run out of time but any gap in our system will create uncertainty or conflict,” said Howard. “Some of these regimes carry penalties such as fines – even criminal offences in some sectors.”

Unless there is an extension to article 50, both these hurdles will need to be crossed by 29 March. This, said Howard, was an impossible task. “Negotiating and ratifying the international free trade deals with the rest of the world alone could take over seven years,” she said.

“A no-deal Brexit could double prices for some products like meat and dairy. There is also a greater risk of trade disputes and sanctions, resulting in reduced market access for UK businesses.

“It’s not just about money,” she said. “We are dependent on imports for a lot of things that we don’t make any more or don’t make enough of, or simply cannot make as they are patented or subject to rules of origin – like lifesaving drugs, radioactive isotopes for MRI scans, medical equipment, chemicals, electricity, petrol, even milk. Shortages and delays could cause panic buying or even civil unrest.”

Rhodri Thompson QC, a specialist in competition and EU law at Matrix Chambers, agreed. He said: “The truth is that this would be extremely difficult and would not cover much of the UK economy at all.”

Howard dismissed ideas of a transition period enabling a “gradual transition” to WTO rules as “unicorns”. “The UK will have to start negotiating over 50 free trade agreements from scratch once we leave the EU. In the meantime we will have to pay tariffs.”

Economists for Free Trade, a group with links to Jacob Rees-Mogg and David Davis, claims there is “nothing to fear” from leaving the EU without reaching an agreement.

David Collins, a professor of international economic law at City University of London, said: “The UK can trade quite easily on an uncertified schedule.”

However, Collins conceded that an uncertified schedule “might be an indication of that complaining member’s intention to initiate a dispute against the member,” and that “the WTO dispute settlement process can take several years to resolve”.

Dozens of MPs and peers, including some with vast inherited wealth, own or manage farms that collectively have received millions of pounds in European Union subsidies.

An analysis by the Guardian and the environmental group Friends of the Earth identified 48 parliamentarians who claimed £5.7m in farming subsidies under the EU’s common agricultural policy (CAP) in 2017, the latest year for which figures are available.

The largest single payment – £473,000 – was paid to a Sussex farming firm run by the 18th Duke of Norfolk, a large landowner whose estate dates from the middle ages.

Conservative MP Richard Drax, descendant of a 19th-century slave-owner and current resident of the family ancestral seat of Charborough House in Dorset, owns a farm that received £411,000.
[Full list at link]
Matt Ridley, the fifth Viscount Ridley, runs two firms which received £316,000. The Blagdon estate in Northumberland has been owned by his family since 1700. The hereditary peer was forced to resign as chairman of the Northern Rock bank in 2007 after presiding over its financial collapse.

British farmers will no longer receive subsidies from the EU after Brexit and will instead be paid by the UK government. The EU subsidies have been criticised for many years for rewarding large landowners, who receive the biggest payments. The top 10% of recipients receive almost 50% of total payments, which in the UK amount to £3bn per year.

The environment secretary, Michael Gove, is proposing to change the system to ensure future payments help to create “a cleaner and healthier environment”. The bill to implement this change is going through parliament.

Campaigners have raised questions over whether politicians will be swayed by their financial interests and seek to influence the bill. The politicians have declared their financial interests in an official register as required under the parliamentary rules.

The minister responsible for piloting the bill through the House of Lords is junior environment minister, Lord Gardiner of Kimble. He is a partner in a family farm, CM Robarts & Son, which received £49,000 in EU agricultural subsidies in 2017.

Asked what measures were in place to avoid a clash of interests, the Department for Environment, Food and Rural Affairs said: “All ministers are required to make known any relevant interests known to them which may be thought to give rise to a conflict.”

It added that Lord Gardiner had declared this interest and that, as with other ministerial interests across all departments, it had been published by the Cabinet Office.

Three other members of the government have farming interests. Lord Taylor of Holbeach, the chief whip in the Lords, has a shareholding in a firm that grows cereals, crops and vegetables which had an EU subsidy of £159,000 in 2017.

Taylor, who was a junior minister in the agriculture department between 2011 and 2012, said he had “disclosed everything in accordance with the requirement of the House of Lords code and ministerial code” and had no further comment to add.

The Conservative MP for Sherwood, Mark Spencer, a government whip, is a partner in a Nottinghamshire farm which received an EU subsidy of £14,000 in 2017. In the House of Commons register of financial interests, he declares that he receives “benefit in kind from the farm of £5,000-10,000 per annum in the form of payment of telephone, heating and council tax of my family home” and performs “a maximum of 80-100 hours per year of otherwise unremunerated work on the farm”.

A farming firm owned by junior education minister Lord Agnew received a subsidy of £212,000 in 2017.

Guy Shrubsole, a Friends of the Earth campaigner, questioned whether the politicians would have their own financial interests or the public interest uppermost in their minds when they came to vote on reforming the subsidy system. He said: “We hope that politicians will put the public interest first and vote to radically overhaul farm subsidies so that, in future, public money goes to pay for public goods, like restoring nature and reducing flooding.”

The list of payments has been compiled from the declarations of financial interests – such as land ownership and company directorships – made by MPs and peers in parliament and the official database of EU payments in the latest available year (up to October 2017) that is published by the government.
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I guess it’s possible the spectre of martial law is being used to scare Brexiteers into another referendum...

We have a unanimous EU27 position on the withdrawal agreement which reflects the common EU position. This withdrawal agreement has been agreed with the UK government, it is endorsed by leaders and is not open for renegotiation.

The risk of accidentally crashing out of the EU without a deal has been described as “very high” by a key EU architect of the Brexit deal, with parliamentary backing for changes to the backstop likely to be met with a brick wall in Brussels.

Senior Conservative MPs are seeking to form a majority in a Commons vote on Tuesday calling for Theresa May to demand an alternative plan to the Irish backstop for avoiding a hard border on the island of Ireland.

But on Monday, EU officials and diplomats said the amendment tabled by the Tory MP Graham Brady, and backed by Downing Street, failed to offer any clue as to what alternative arrangement parliament could support.

With the votes on Tuesday unlikely to offer any clarity on what MPs can unite behind, the EU’s deputy chief negotiator, Sabine Weyand, offered a sober analysis of the chances of a deal being ratified in Westminster.

She said: “We need to have a majority that doesn’t just get agreement over hurdle of a meaningful vote by a narrow majority but we need to have a stable majority to ensure the ratification. That’s quite a big challenge. There’s no negotiation between the UK and EU – that’s finished.

“There’s no point beating about the bush – the agreement was defeated with a two-thirds majority in the House of Commons. That’s a crushing defeat by any standards. It’s quite a challenge to see how you can construct out of the diversity of opposition a positive majority for a deal.”

Weyand said of the two years of talks due to end on 29 March: “There’s a very high risk of a crash out not by design, but by accident. Perhaps by the design of article 50, but not by policymakers.”

“We think we can handle it,” Weyand said. “I’m less sure about UK side. For us it’s about EU-UK trade relationship and disruption to supply chains. For the UK a no deal would mean that a part of the regulatory and supervisory structure of economy breaks away – a much bigger challenge.”

In an apparent sign of the frustration in Brussels at May’s handling of the negotiations, the German EU official also contrasted the transparency in Brussels on their goals to the approach taken by Downing Street.

Speaking at a thinktank event in Brussels, she said: “You cannot lead a negotiation like that in secrecy. We’ve seen on UK side the fact this was handled in a very small circle and that there was no information about all the things that were tried in the negotiations is now a big handicap.”

The prime minister is set to return to Brussels in the coming days but Michel Barnier’s deputy offered little succour to those in London hoping for a renegotiation of the withdrawal agreement containing the backstop, an arrangement under which the whole of the UK could stay in a customs union in order to avoid a hard border.

The amendment tabled by Brady, the chair of the backbench 1922 Committee of Tory MPs, commits MPs to backing the withdrawal agreement should the prime minister secure a replacement of some sort for the backstop.

But some Brexiters have said they will only vote for the withdrawal agreement if the Irish backstop is replaced with a simple statement of intent over avoiding a hard border.

Other MPs, including Brady, are in favour of drafting a separate legal document detailing how the UK might in certain circumstances extract itself from the customs union envisaged in the backstop.

“We’re not going to reopen the agreement,” Weyand said at the European Policy Centre event. “The result of the negotiation has been very much shaped by the UK negotiators, much more than they actually get credit for. This is a bit like snatching defeat from the jaws of victory. The backstop was very much shaped by UK.”

“It feels like Groundhog Day,” Weyand added of others in Westminster calling for a time limit or unilateral exit clause in the backstop. “None of this is new. This has been extensively discussed at the negotiating table amongst the EU27. EU27 were unanimous a time limit to the backstop defeats the purpose of the backstop.”

Of the suggestion that there was a technological solution for avoiding a hard border, Weyand said: “We looked at every border on this earth, every border EU has with a third country – there’s simply no way you can do away with checks and controls.

“The negotiators have not been able to explain them to us and that’s not their fault; it’s because they don’t exist.”

She added that in the event of a no-deal Brexit, the UK and Irish governments would “lose the one operational solution to the Irish border conundrum but we’d be stuck with the same scenario”.

“So you could imagine a no-deal scenario with the backstop being discussed,” she said.

Weyand further warned that the debate in Westminster, in which discussions over the rival strengths and weaknesses of Norway and Canada’s relationship to the bloc have recently dominated, appeared at times to be “uninhibited by any knowledge of what is actually in the withdrawal agreement”.

“Our impression is discussion is much more about the future of the country and the future of the UK-EU relationship than about the content of the withdrawal agreement,” she said.

A separate amendment due to be voted on, tabled by the Labour MP Yvette Cooper, would force the prime minister to delay Brexit beyond 29 March should she have failed to ratify a deal by the end of February.

Weyand said the EU’s heads of state and government would need information on “the purpose of an extension”. “The idea of going into serial extensions really isn’t very popular in the EU27,” she added.

[...]
What irony that P&O Ferries has announced that Brexit is forcing it to deregister from Britain, putting its entire fleet under the Cypriot flag. No red duster will now ply the channel from Dover to Calais, only foreign flags. Rule the waves? We won’t even have a British red ensign flying across the Channel. Once foreign-flagged, P&O ferries can’t be requisitioned for any no-deal Brexit crisis.

The 180-year-old “Peninsular and Orient” line is steeped in the kind of British history our Brexiteers celebrate. Founded in the wake of the Napoleonic wars, it shipped the empire: profiting from the opium war, it transported 632,000 tons of opium from Bengal to China. Under royal charter it delivered the Royal Mail to India and in the postwar years it carried more than a million “£10 Poms” – British emigrants to populate Australia. It lost 85 ships in the first world war, 179 in the second. Decline began with India’s independence; in 2006 it was sold to Dubai.

How perverse that Brexit – designed to bolster quintessential Britishness – has caused the final loss of P&O Ferries to the British flag. “For operational and accounting reasons, we have concluded that the best course of action is to re-flag all ships to be under the Cyprus flag,” says P&O. Registering in Cyprus will “result in fewer inspections and delays”, with “significantly more favourable tonnage tax arrangements as the ships will be flagged in an EU member state”.

It will indeed be easier to operate from inside the EU. It promises no change in working conditions, for now. Yet Brexit will be a problem for British crews, who need certificates of competency. Once their certificates lapse, as with other professions and trades, it may take years before the EU recognises UK qualifications: we’ll join a long queue of countries applying; and without recognised certificates, British citizens can’t work.

Those who are leading – or misleading – the country into Brexit are the very same political breed of free marketeers who allowed the cataclysmic demise of British shipping. That began in the 1980s, since when the number of British merchant navy officers has been cut by two-thirds. Though 95% of our imports and exports go by sea, we rely mainly on foreign ships to bring everything. No longer a seafaring nation, Britain now owns just 0.8% of global shipping; and of those few, only a third are still registered under a British flag. Forty years ago there were 90,000 mariners; now there are just 23,000.

Some two-thirds of ratings on ships registered with the UK Chamber of Shipping come from low-paying non-EEA countries. Unlike most immigration fears, this is a genuine case of foreign labour undercutting British employees, as there’s no lack of British young people yearning for a life at sea. Nautilus, the union for professional mariners, says 10 well-qualified young people apply for every apprenticeship. Though companies are obliged to do some training, they rarely take on apprentices once trained. Why should they, when they can pay at least a third less and still comply with global minimum standards?

T here was a reason why P&O chose Cyprus, out of plentiful other EU countries. Why not France, the obvious choice for plying the channel? Because France is unionised, with high standards. Cyprus is a flag of convenience, despite being in the EU. Over half the world’s ships are now registered under flags of convenience. In countries such as Panama, Liberia, Singapore and the Marshall Islands, it’s cheap to register, tax is low, and standards are the bare legal minimum. There are few inspections for safety, food, clean water, rest hours and conditions for crews.

In the deregulating 1980s, British shipping joined a global free-for-all. This is exactly the behaviour the EU should prevent, with stricter rules about who uses its ports. The US has its 1920s Jones Act forbidding any but US-built, -owned and -crewed ships plying from one US port to another. Why hasn’t the EU done likewise? In the fiercely competitive global shipping market, only the EU can stop a downward plunge in pay, conditions and safety.

Yet again, Britain is to blame, acting as drag-anchor on EU progress. A manning directive was proposed to keep crews of ships sailing between EU ports protected by EU pay and conditions, but Britain helped the ship-owners sabotage the plan. The UK also chooses to issue the most certificates of equivalent competency to foreign crews, less well-trained and paid, undercutting its own mariners but pleasing the shipping lobby. We even let foreign ships and crews sail to and from our ports to our own oil platforms and wind farms.

Britain’s role in the EU has too often been to stop progressive employment laws: remember our shameful opting out of the social chapter, until the Labour government opted us back in. How surprising that EU citizens still say they want us to stay. Yet more surprising are the few trade unions who back Brexit. Researching the P&O story, I was called by Mick Cash, head of the RMT, representing ratings. So I asked why he backs Brexit, when it would be easier to win strong shipping regulation from within the EU. The victorious Brexiteers will be ideologically opposed to creating better British working practices: they are the ultimate deregulators. But Cash says he still reckons Britain alone will, in some future halcyon day, be more free to set its own better rules independent of the rest of Europe. Most unions and the TUC disagree – as does Nautilus, deeply alarmed at the likely damage done by Brexit.

P&O is just one case of Brexit flight, as other big companies threaten disinvestment and departure. But P&O taking the opportunity to fly a flag of convenience stands as a warning for how post-Brexit Britain will try to compete by deregulating and undercutting. Today’s Westminster “battle of the amendments” may seem remote to many, but the next few weeks will settle the future for us all for decades – for better or very much worse.

The only problem: it stands no chance of being acceptable to the EU.
There seem to be three fundamentals to the plan: the extension of the implementation period to 2021, technological solutions to ensure no border infrastructure requirements on the island of Ireland, and an interim free trade agreement to be tabled immediately. This has been termed a “triple-lock”.

The first element is uncontroversial and indeed already part of the draft withdrawal agreement between the EU and UK. It means a standstill period during which trade carries on as before, and the UK continues to follow EU rules and trade policy, including a common external tariff.

It is the second and third parts that are almost certain to be unacceptable to the EU. Technological solutions for the Irish border have been endlessly debated, but there is no border in the world outside of the EU where there are no physical checks, including the often cited Norway-Sweden and Switzerland-EU borders. Only where both countries are in a customs union and have more or less the same product regulations backed by a common court have checks been eliminated.

For customs checks to decide whether tariffs are payable, a border is the only place where you always get the transport, declaration, supporting documents and goods together at the same time. Without this, the opportunities for smuggling are too great, and it should be remembered that checks are based on a risk management approach, aimed at smugglers rather than regular traders.

Non-customs checks, typically on animals and animal products, or potentially dangerous products such as chemicals, are equally tricky. The document on which the compromise is based appears to be Shanker Singham’s A Better Deal. It says that “The Parties agree that inspections on veterinary and SPS [Sanitary and Phytosanitary Agreement] regulations shall be done at the premises of the exporter, importer, or at official border inspection facilities, located in the vicinity of the point of entry into the territory of the other Party.” This in fact recognises that there would almost certainly need to be border infrastructure of the type the backstop, with alignment of Northern Ireland for customs and product rules, was designed to prevent.

The backstop is a firm red line for the commission, and there are numerous reasons why it will not be changed. The EU will demonstrate that its word cannot be trusted if it reverses. It is a guarantee promised to a member state, and to prioritise the interests of a soon-to-be third country over a member state would be devastating to the EU’s credibility. It has consistently rejected the view that technology solutions could replace a border. Finally, the EU does not trust the UK not to backslide from a vague no-border commitment, based on the fact that so many in the UK have downplayed the issue.

The interim free trade agreement, to be tabled immediately, would not help avoid border checks. Even without tariffs there is no full free trade outside of a customs union, for rules of origin must be checked to ensure the product is eligible for a zero tariff, for example to stop a Chinese product being rebadged and passed off as a UK product. The agreement also envisages UK regulations differing from those in the EU.

And the chances of the EU accepting an interim free trade agreement, drawn up in a matter of days or weeks, are close to zero. The EU typically takes upwards of five years to reach such agreements, in large part to make sure it is a good deal that will benefit the whole economy and has widespread support among member states. The UK would be wise to take the time needed in order to achieve this, not least because sensitive questions, such as which food standards and other regulations we should follow, are bound to be controversial.

There is a mistaken belief that the PM will be strengthened by a unified Conservative party position. However such a position has to be realistic, and one that directly attacks the most fundamental red line of the European commission is not. It is almost as if the commission suggested the UK abandoned its commitment to end freedom of movement. On the contrary, this compromise is likely to infuriate the EU and member states, who will see in it a continued failure of the UK to grapple with the choices brought by Brexit, and a rerun of ideas already rejected.

British nationals who have retired to EU countries including Spain and France will no longer have their healthcare covered by the NHS in the event of no deal, the government has said.

The confirmation will come as a blow to around 190,000 British citizens retired in the EU in the Spanish Costas, Provence in France and Tuscany in Italy, all popular with British pensioners.

It could also add to the burden on the NHS if pensioners believe they have no option but to return to the UK for treatment. The government has previously admitted it is cheaper to pay Spain and France to look after Britons’ medical bills than have them fly home.

Currently pensioners can get treatment reimbursed by the NHS under an EU-wide body of reciprocal arrangements.

“It is another example of how those advocating ‘no deal’ are playing with the lives of British citizens living in other EU countries,” said Colin Yeo, an immigration lawyer and freedom of movement campaigner. “Many of these politicians and pundits probably haven’t bothered to find out how their policies would actually affect such people.”

For many the alternative may be to return to the UK, something the government has said in the past will cost the British taxpayer more in NHS expenditure because of the savings in cheaper health systems around Europe.

Pensioners who have paid in to the national insurance system for the qualifying number of years currently benefit from the “S1” reciprocal healthcare rules if they retire in the EU, EEA countries or Switzerland.

An S1 certificate is available to anyone in receipt of a state pension, and to some workers who are sent abroad on a temporary basis by their UK employers.

The government stated in a little-publicised no-deal technical notice published this week: “An S1 certificate helps you and your dependents access healthcare in the EU/EEA country where you live. If you have an S1 certificate, it will be valid until 29 March 2019. “After this date, the certificate may not be valid, depending on decisions by member states.”

The government’s “overseas healthcare” phoneline has updated its pre-recorded messages to include a no-deal warning, telling those who are considering moving to another country within the EEA or Switzerland that their S1 application will only be processed if they apply “in the next four weeks”.

The government says it is seeking bilateral deals with other EU countries on the continuation of healthcare but so far none have been arranged.

One of the big questions MPs have has been answered.

The reason that MPs and frontbenchers – across all the political parties – give that an election is so unlikely is that the Conservatives have to avoid one because they cannot possibly cohere around any kind of Brexit position. One minister predicted that the party would “disintegrate” over the course of an election campaign. Another told me it would be “the death of the party” as every single parliamentary candidate would put forward their own Brexit position.

It’s not quite accurate to say that the Malthouse Compromise – the nominal plan around which a large number of MPs have been able to unify – has ended the Conservative Party’s divisions. Several Tory MPs are well aware that the contents are fiction and that it ignores several vital tradeoffs. But is has broadly quelled the party’s internal rows and, equally significantly, the nation’s broadcasters and much of the press has largely failed to ask any difficult questions like “How would this work?” “Why would the European Union agree to this?” and “You do know that’s not how the World Trade Organisation works, right?”

The secret to the party’s unity is that most Conservative MPs can broadly agree on what they want out of Brexit: to maintain the strength of the United Kingdom’s world-leading sectors, to safeguard the United Kingdom’s integrity, to maximise the country’s regulatory autonomy, to be able to pursue an independent trade policy and to maintain a decent standard of access to the single market.

The problem is that the second you ask anyone which of that shopping list to prioritise, unity breaks down. The Malthouse Compromise avoids all that by simply restating the shopping list.

What about Labour? Day to day, that party has a huge advantage over the Conservatives. If you picked almost any three Labour MPs at random you’d have three different opinions on Brexit, but they could all at least agree that they would rather be focussing on something else. (Even Kate Hoey, the most devoted of the party’s Leavers, has a wide range of interests outside of the Brexit question.)

But the problem is that while Labour can disagree more cordially, you couldn’t get anything like the same unity around what they want out of Brexit within the parliamentary Labour party, let alone the membership or the trade union movement.

That’s not to say that an election is risk-free for the Tories (the biggest problem for the Conservatives is that any election called on Brexit would almost certainly move onto less comfortable topics). But it is to say that the general assumption that they couldn’t unify around an agreed Brexit position has a few holes in it.