Tag: EU

I have been pondering in what sense does Brexit affect UK sovereignty. In simple terms, the UK’s sovereignty is unchanged. The UK has the right to leave the EU, therefore it has independent authority whether it chooses to use it or not.

What is Sovereignty?

Wikipedia defines Sovereignty as the “power of a governing body over itself, without any interference from outside sources or bodies.” This suggests that we need to consider degrees of power, and this takes us rapidly beyond the simple terms above.

In one regard, the definition above suggests leaving the EU would clearly increase the UK’s sovereignty. Currently there is a lot of interference from EU bodies that a Hard Brexit would remove.

Sovereignty – to give it away or to exercise it?

Another way to think about degrees of power is to consider effectiveness i.e. the power to do or get things you want. While a country might claim theoretical power to do anything it wants to, in practice all countries enter in binding agreements with other countries which put constraints on some behaviour in return for other benefits. For example, a trade treaty creates easier trade once you agree to certain standards, or joining NATO because you care about your economy and your security. In this way, you exercise your sovereignty, giving up some of your autonomy in exchange for a benefit you value more highly. To use an analogy to the individual: you lose autonomy by having a job (you have a boss and you have to go to work) but you gain power to do what you want by having money.

Relative power

Relative power therefore, is an important determinant of the effective sovereignty of a country.
If you are very powerful compared to another country, then a treaty you enter into will likely be better suited to your preferences than to theirs. Whilst superpowers and small states are both sovereign, in practice the superpower gets to set the terms a lot more often.

Smaller states can change this is by clubbing together: finding like-minded states, forming coalitions, standing up to larger powers by, in effect, acting like a large power themselves. If your internal values and goals are similar, then the loss of independence is more than made up for by the increase in power you gain. Thus, the EU is a greater global power than any of its constituent countries. The US, when thought of as constituent states, is similar. Under this approach, you could even suggest “sovereignty” has been increased by pooling it, rather than diminished.

And finally back to Brexit….

The question for the UK is whether it had more effective sovereignty by pooling its sovereignty within the EU or by going it alone. This is a way to think about why people voted the way they did.

1. Is the UK pooling its sovereignty with countries with which it shares values?
2. If the UK left would it be a significant global power?

For people older than me, my guess is that they do not feel an affinity with continental Europe let alone its values, and at same time retain clear memories of when Britain was a significant global power.

For people younger than me, there is a much greater affinity for European culture and values, and a very limited sense that the UK is an important independent state if it were alone on the global stage.

Thus, one group sees a freedom from EU control, and with that an ability for the UK to use its power without restraint. The other sees a separation from modern liberal values, towards political extremism and a rapid decline in economic and political power.

I outlined my thoughts on the progress in Brexit discussions back in August (“Brexit means no Brexit!”), at a time when the UK government was attempting to give energy to the talks, already appearing to stall. May’s speech this week, again an attempt to break the deadlock, largely confirmed these opinions i.e. we still have no proposal on either Ireland or financial obligations and we prefer not to talk about them. The Conservatives are united around holding out for an impossible deal, Labour has united around agreeing not to talk about Brexit.

Concessions?

The UK media, on the other hand, seems to create a false impression that progress is being made, for example with talk of “concessions”. It is indeed a concession for the UK to ask for a 2-year transition, but not, as often misleadingly reported, a concession of the UK to the EU. It is a concession between different squabbling wings of the UK government, with the hardliners eventually agreeing to it. The UK media also present this transition deal as certain to happen i.e. the views of the EU are presumed to be irrelevant. These “concessions” are better thought of as the continuing struggle for the UK government to work out its opening negotiating position. This further support my views in the previous post that we have made very little progress.

Where next?

I have spent some time thinking about what the outcome of these negotiations will be. I see 3 broad possibilities:

1. Hard Brexit
   The UK leaves Single Market and Customs union without a clear replacement, relying upon rebuilding global trade. (it could be with or without a transition period).
   In this way, the UK joins N Korea in prioritising sovereignty over economics.
2. Soft Brexit
   The UK stays inside Single market, accepting the EU’s rules. This is pretty much the same as being inside the EU, except the UK gives up participation in the EU government. I thought this sounded a bit like being a colony, closer to what the Leave campaign said the current situation is. Maybe like America before the War of Independence.
3. Bespoke deal
   Ideally a “have cake and eat it” deal but could also be more reasonable. Some form of customised new relationship for mutual benefit, where the UK retains good trade links, but is able to stop free movement of people.

Let’s think about the UK’s view on these possible outcomes:

1. Loved by Brexiteers. Obviously, I think it is madness.
2. No-one wants this outcome. Clearly worse than staying in.
3. This is the mainstream view that Leavers and Remainers will find common ground.

And the EU view:

1. It would be the UK’s choice. Looks insane but if they want it, the EU cannot stop them.
2. Ideal. No economic shocks and would get rid of the troublesome UK.
3. This is the interesting one – see below…

Does the EU even want a bespoke deal?

The evidence so far suggests the answer is a clear no. Statements from the major EU politicians have been entirely consistent i.e. for free market access to EU markets, you need to abide by EU rules (freedom of movement and oversight by the ECJ)

But in negotiations words are cheap, so let’s look at the EU’s behaviour. If the EU wanted a bespoke deal, it would share in the UK’s anxiety to get moving on talks now, as any delay adds to the risk that a complicated deal will not be made. However, they seem not to be in a hurry at all, happy to have negotiations sit where they are. It also implies that even if the UK makes an agreement on the EU’s
three red lines, they will be sorely disappointed by what the EU puts on the table next.

Which is better? No Deal or a Bad Deal?

May initially declared that the UK would prefer “No Deal”. But after the general election result,
it’s clear that only the hard line Brexiteers really believe that. At least in the UK….

I think it might be the case for the EU however. A bespoke deal is a nightmare for them. It would threaten the integrity of the Single Market, the political concept of the EU and be a loss of sovereignty. Why would the EU agree to have regulation done in partnership with the UK? Surely, they will just do their own regulation and if the UK wants to freely access the EU market, then the UK can agree to subordinate its regulation to the EU.

Transition

This brings us back to transition periods. In my previous post, I described how the EU and the UK think differently about transition. For the EU, it is a bridge between the current situation and a known destination. For the UK, it is a lifeboat while you work out where you want to go.

I previously suggested this made a transition period highly unlikely, but I had not considered another option, a transition with virtually nothing changing. This seems highly likely to me as it would suit both sides. The UK will legally have left the EU, with no option to change its mind, thus pleasing the hardcore Brexiteers. For the EU, the UK would then have even less negotiating leverage. The UK can either stay as an EU satellite state or leave as it chooses.

Conclusion

The UK desperately wants a bespoke deal. Ideally a favourable one but anything that is better than the economic disaster of Hard Brexit and the political disaster of Soft Brexit. Desirability bias (“Desire – The Fatal Flaw”) makes the UK think a good deal is likely. But the EU is not cooperating, which leads me to believe that it has no interest in any such deal. I think that the EU may offer the UK a choice between Hard Brexit or abiding by all the rules without a seat at the table.

I returned from holiday eagerly anticipating the papers setting out the UK’s position on Brexit.
As far as I can make out, the UK’s primary idea is that the UK firmly leaves the EU…. and also, that it does not!

Customs Union

The UK will leave the Customs Union in March 2019. Today’s proposals relate what happens after.

The UK government proposes to then enter “a new customs union based upon a shared external tariff and without customs processes and duties between the UK and the EU.”

Hmmm. That sounds remarkably like not leaving?

Well it is not identical to not leaving. The UK also says it would be “time limited” (i.e. a transition), importantly during which they would be able to negotiate new trade deals.

The government also mentions that this is a “innovative and untested approach”, hardly a confident endorsement.

Transition

Leaving aside how reasonable this proposal is, the key conceptual error is misunderstanding what the UK and the EU mean by a transition.

• For the EU, a transition is a well-constructed bridge between where we are now and an agreed future destination. Therefore, what really matters is to agree the destination.
• The UK seems to see a transitional deal as a lifeboat. It is the resting place after we leave the EU where we decide where we are heading to.

This leaves the discussions in a precarious position. The EU has no interest in discussing the features of a bridge to nowhere.

Where are we heading?

This is the part I do not understand and I am sure the EU will not understand either. I cannot even write down the UK proposal in a way that makes internal sense, let alone decide whether it would be acceptable or reasonable.

I would instead highlight a dangerous misconception coming from the UK negotiators, often cited in the UK press, that “tariff-free trade” is the same thing as “frictionless trade”.

This perpetuates the myth that the major barriers to trade are tariffs. The major barriers to trade are regulation. The big problem with the US exporting chlorine-bleached chicken to the EU is not a tariff, it is that the process is illegal in the EU.

If the UK leaves the EU and does not abide by EU regulations, then having a zero tariff is irrelevant. The UK’s current plan to create a lower regulation environment for UK produced goods, and similarly when making trade deals with the rest of the world, to import goods which do not meet EU standards.

In this respect, the main policing of the Customs Union is not by the UK, it is by the EU to protect themselves. We may freely take all EU goods, but the EU will likely not take ours.

On the items, the EU wants to make progress on….

N Ireland (previous post – Brexit and Ireland)

So far, we do not have much of a plan. The importance of the DUP since the election, means that there will not be a border drawn between N Ireland and the rest of the UK.

Apparently, the fact there is currently no smuggling issue between the North and Republic of Ireland, means that there will likely not be one after the UK leaves the Single Market and Customs Union.

The idea seems to be that we will have a hard border, but this will not require an actual border.

Again don’t ask me to explain that one.

Brexit Bill (previous post – Settling the Brexit Bill)

The EU has asked the UK to come up with a proposed number and methodology for its calculation.
They are still waiting.

EU Nationals status

The EU proposal is that everyone retains the automatic right to stay where they are.

The UK idea is that EU residents can apply for some kind of second-class citizen status.

Conclusion

So far, the only UK request that makes much sense to me has been to ask for more time.

Of course, a simpler way of doing this would have been to have delayed triggering Article 50 until we had some idea what we wanted.