John Bruton

Opinions & Ideas

Category: BREXIT (Page 2 of 2)

WILL BREXIT NEGOTIATIONS BE OVER BEFORE THE 2020 UK  GENERAL ELECTION?

union-jack-1027896_960_720The next UK General Election will be in 2020.  If the Article 50 notice is served in 2017, it is possible that the process of UK withdrawal from the EU will not be concluded before the UK General Election in 2020.

That might allow the UK Electorate to take a second look at their decision of 23 June.

The Article 50 process, once activated, proceeds according to paragraph 2 of  Article 50.

 The mechanics of the negotiation are set out in Article 218 (3), which governs the making in international agreements by the EU.

It provides for the negotiation to be done by the Commission, subject to directives from the European Council. Ireland would formally make its input via the Council.

A key phrase in Article 50 is that the Withdrawal negotiation would be conducted

 “taking account of the future framework of its relationship”

with the country leaving the EU .

In other words, the Withdrawal would take place within a wider framework, which would also be  agreed between the EU and  the UK.

So there would be two parallel processes

  •  a negotiation of a framework of  the future relationship with the UK, and
  •  the Withdrawal negotiation itself.

In effect the two negotiations would be linked.

This is different from what Commissioner Malmstrom said recently.

She said the broader negotiation could not take place until AFTER the Withdrawal agreement with the UK was concluded, and the UK was already outside the EU.

Her interpretation seems to me to be contradicted by the words of Article 50 because it ignores the fact that the reference in Article 50 to a broader framework agreement.

If the  formal  Withdrawal arrangement under Article 218 (3) has to be subject to a wider framework being agreed, the whole process could take a very long time indeed,  and meanwhile the  status quo would continue until both agreements are completed and ratified.

The Withdrawal part could be quickly agreed, but the future framework would be much more difficult and could drag on and on, because it would have to cover all sorts of knotty trade and regulatory issues which could not be settled on the basis of generalities.

That is assuming the UK does not join the EEA, which would simplify these “framework” issues.

It also assumes unanimous consent in 2019 of the 27 EU members to extend the 2 year withdrawal period, but that should not be impossible

Of course, it requires the UK  not to derail the process by unilaterally breaching the Treaties by failing to implement EU law, during the negotiations, Eg by immigration  controls or repealing  some EU legislation on working hours.

It assumes that the UK would be willing to stay in a “half in/ half out” position for a long time, without enjoying the supposed benefits of Withdrawal, but with its influence in the EU diminished.

The UK should probably have given more thought to these complexities before triggering a  referendum.

 But the complexities do allow time for reconsideration, assuming there is, at some time in the next three years, a political willingness to reconsider in the UK.

That does not look likely now, but moods can change.

The UK has a big balance of payments deficit already….Brexit or no Brexit.

The inevitable unwinding of that deficit will reduce economic growth, which normally would also reduce immigration. So opinion may be different in 2020.

That said, other EU countries, including Ireland must prepare our economies on the assumption that full Brexit will happen.

UK GOVERNMENT FIRST STEPS NOW

Now that the UK has voted to leave the EU, the first step has to be taken by the UK Government.

It must decide what sort of relationship it wants to have, trade wise, with the rest of the world.

At the moment, that is governed by agreements negotiated, for the UK, by the EU.

If the UK simply leaves the EU, all those agreements will  fall, as does UK membership of the World Trade Organisation(WTO). Agreements with dozens of non EU countries, will have to be negotiated again, at the same time as negotiating  with the EU. A lot of work.

Basically the UK government will have to choose choice between three options

  • Leave the EU and, like Norway, apply to join the European Economic Area (EEA),
  • Negotiate a new special trade agreement, like the agreement Canada or Switzerland has with the EU
  • Leave the EU without any trade agreement and apply, as a separate country, to join the WTO

The EEA option could be put in place quickly and would not disrupt trade all that much.

The EEA is a readymade model for external association by a non member with the EU. It could be taken down from the shelf, so to speak.  But, as an EEA member, the UK would still have to implement EU regulations and contribute to the EU budget. It would not allow curbs on EU immigration. The EEA option has been dismissed by “Leave“ campaigners, but it does involve leaving the EU, and  complies  with the literal terms of  the  referendum decision.

If the UK experiences severe balance of payments problems over the summer, the EEA option may become attractive. The UK already has a big balance of payments deficit anyway and capital inflows may be inhibited by the Leave vote. The EEA option would buy time, and would not preclude leaving altogether eventually.

The second option, a special trade deal, would be much more difficult.

It would require a detailed negotiation on every type of product or service sale between the UK and the 27 member countries of the EU, including across our border.

Such an agreement would take years to negotiate (probably 7 or 8 years), because it would be subject to domestic political constraints, and political blackmail attempts, in all EU countries, each of whom  would have to ratify it. If it proposed curbs on immigration from the EU, the EU countries affected  would make difficulties with other aspects of the deal, as a bargaining counter.

It is unlikely that a Trade Agreement would allow the UK to sell financial services into the EU. Indeed it would be in the interest of EU countries, that might hope to attract financial services, to make sure the UK got few concessions .

The third option…leaving the EU with no agreement… could come about, either because that was what the UK chose, or because the negotiations on a special trade deal broke down or were not ratified by one or two EU states.

It would require the application of the EU common external tariff to UK or Northern Irish products crossing the border into the Republic.

Average EU tariffs are around 4%, but on agricultural goods the mean tariff is 18%. The imposition of these tariffs is a key part of the Common Agricultural Policy, which protects the incomes of EU farmers. We would have no option but collect them at customs posts along our border. All forms of food manufacture and distribution within the two islands would be disrupted.

The disruption of the complex supply chain of the modern food industry would be dramatic and the knock on effects impossible to calculate.

A similar effect might be felt by the car parts industry, which is subject to tariffs, and is important to some parts of England.

Meanwhile the remaining 27 countries of the EU, and the EU institutions, will have a lot of thinking to do too.

They need to respond decisivly to the (false) claim that the EU is not democratic.

All EU legislation has to be passed by a democratically elected European Parliament, and also by a Council of Ministers who represent the democratically elected governments of the 28 EU countries.

The members of the European Commission must be approved by the democratically elected European Parliament.

But there is room to further  improve  EU democracy.

I  would make two suggestions ,

  • The President of the European Commission should be directly elected by the people of the EU in a two round election , at the same time as the European Parliament Elections every 5 years

2.)To create a closer link between National Parliaments and the EU, a minimum of nine national parliaments agreeing should be sufficient to require the Commission to put forward a proposal on a topic allowed by the EU Treaties . National Parliaments can already delay EU legislation, so they should be free to make positive proposals too.

That said, the EU should avoid over promising, and should not allow itself to be blamed for all the problems people face in their daily lives.

The EU is not an all powerful monolith that can solve the problems caused by technological change and globalisation. It is just a loose voluntary confederation of 28 countries, with no tax raising powers of its own. Nor is the EU responsible for debts mistakenly taken on by its members.

If the losers of globalisation and technological change are to be sheltered from misfortune, it is for the 27 states, not the EU itself, that has the taxing power to redistribute money from the winners from globalisation  to the losers.

The UK has not been particularly generous in this regard.  Its welfare system is modest, and its investment in productivity improvement has been poor.

In some respects, UK voters  have just mistakenly blamed  the EU. for the effects of the  omissions, and under performance, of successive UK governments.

THE EU IS ALREADY DEMOCRATIC…..TWO WAYS IN WHICH THAT CAN BE MADE MORE VISIBLE

The-UK-and-EU-flags-010One of the recurring themes in the debate about UK membership on the EU is the (false) claim that the EU is not democratic.

All EU legislation has to be passed by a democratically elected European Parliament and also by a Council of Ministers who represent the democratically elected governments of the 28 EU countries.

It is true that the members of the European Commission are not democratically elected by the people, but their names must be proposed by democratically elected governments of the 28 countries, and the Commission as a whole must be approved by the democratically elected European Parliament.

In many countries, Ministers serve in government who have not, as individuals, been elected directly. Their democratic mandate comes from the elected government of which they are part.

This is not to say the there is no room to improve the democratic legitimacy of the EU, and of its policies. I believe the EU could respond to the UK referendum by further enhancing EU wide democracy.

I make two suggestions to improve the visibility of the democratic character of the EU, and create a genuinely European democratic debate, rather than 28 separate national debates about EU matters

  • The President of the European Commission should be directly elected in a two round election by the entire people of the EU, at the same time as the European Parliament Elections
  • It should be possible for the National Parliament of the 28 to come together to request that the Commission put forward a proposal on a particular matter. National Parliaments( if a minimum number agree) already have a right to petition to delay a piece of EU legislation, so why not give them a positive right to seek the promotion of a piece of legislation (if they can obtain a similar level of support across a number of countries).

WHAT HAPPENS IF THE UK VOTE IS TO LEAVE THE EU?

cropped-European-Union-flag-006.jpgI spoke earlier this week at a very interesting meeting organised by the County Meath Association of Chambers and Business Councils in Kells Co Meath on the topic of Brexit.

Next week, I will speak on the subject at meetings in Liverpool and Birmingham, and will be able to bring to the attention of UK voters at these meetings some of the concerns expressed in Kells.

The consensus at the meeting in Kells was that there would be a dramatic impact on the Irish economy if the UK, including Northern Ireland , left the EU.

DISRUPTION OF EXISTING BUSINESS PATTERNS ON A HUGE SCALE IF TARRIFS HAD TO BE REINTRODUCED

Patterns of trade on these island that have grown up over centuries, would be radically disrupted.

All forms of distribution within the two islands would be disrupted in EU tariffs had to be charged on goods coming to the Republic from Northern Ireland and Britain.

One member of the audience, who holds a very senior position in the food industry , pointed out that products as simple as a sandwich sold in a service stations, now contain a mixture of ingredients produced in the Republic of Ireland, Northern Ireland and in England.

If the UK left the EU, and Ireland had to impose the Common External Tariff of the EU, on food ingredients coming from either Northern Ireland or Britain, many present food distribution systems would become uneconomic, and hundreds of jobs would be lost.

The disruption of the complex supply chain of the modern food industry would be dramatic.

The Common External Tariff can be as high as 35%.

The knock on effect is impossible to calculate. It would be like having to unscramble an omelette!

IMMEDIATE EFFECT WOULD BE A CHANGE OF GOVERNMENT IN LONDON

I pointed out that this would not, of course, happen overnight on 24 June, because Britain would first have to decide on who would be Prime Minister and what would be the make up on a post Brexit Government.

How long would it take to elect a new Tory leader? Until that issue is decided no decisions on EU policy would be possible.

Only once that was settled, could the UK begin to decide what type of new arrangement it would seek to have with the EU.

NEW UK GOVERNMENT WOULD HAVE TWO OPTIONS

It would have two basic options

  1. it could ask to leave the EU and, like Norway, join the European Economic Area, or
  2. it could try for a wholly new special trade agreement, like the agreement Canada or Switzerland has with the EU

THE EUROPEAN ECONOMIC AREA (EEA) OPTION

The first option could be put in place quickly and would not disrupt trade all that much. It would have the disadvantage that the UK would still have to implement EU regulations and contribute to the EU budget.

Technically it would, however, comply with a referendum vote in favour of leaving the EU. It would buy time, allowing us to see whether the fears being stoked up in the present campaign have substance or not.

THE TRADE AGREEMENT OPTION

The second option would be much more disruptive.

It would require a detailed negotiation on every type of product or service that might be sold across the border in Ireland or between the UK and the 27 member countries of the EU.

Such an agreement would take years to negotiate (probably 7 or 8 years), and would be subject to domestic political constraints in all EU countries. We can see with TTIP, which is a much narrower negotiation, how matters can become the subject of fears, misrepresentations and lobbying.

It is unlikely that a Trade Agreement would allow the UK to sell financial services into the EU. Indeed it would be in the interest of countries that might hope to attract financial services out of London and into their own capitals to make sure the UK got no concessions on that point.

WHY IS THE SOVEREIGN UK PARLIAMENT DELEGATING ITS RESPONSIBILITIES TO A REFERENDUM?

I believe that a referendum is not a suitable method for making a complex choice like the one UK citizens are now being asked to make.

The UK used to be a parliamentary democracy, not a plebiscitary democracy , like Switzerland Parliament is sovereign under the UK constitutional system, but the exercise of this sovereignty is now being delegated by parliament to a referendum.

This displays a lack of confidence by Parliament in itself.

A referendum requires people to make a snap decision on a single day, without knowledge of the future implications of what they are doing. It requires complex contingencies to be reduced to a single “yes” or “no” question.

A parliamentary process, in contrast, goes on over a long time, and thus allows new evidence to be taken on board, before an irrevocable decision is made.

UNDERSTANDING ENGLISH HISTORY…..A HELP IN PREDICTING THE REFERENDUM RESULT?

englishIn a quest to understand English nationalism, which is currently manifesting itself in a campaign to take the entire United Kingdom out of the EU, I have been reading as much English history as I could find.

One of the best books I have found particularly good is “The English and their History” by Robert Tombs, who is an historian in Cambridge University specialising in Anglo French relations.

Now that the Empire is over, and the Scots have been granted the possibility of leaving the United Kingdom, the English, naturally enough, are focussing on their own distinctive story, as a means of identifying who they are, and what makes them different.

Tombs make a number of claims that are of interest in this context.
He says that English and Irish(Gaelic) were the two most developed vernacular languages in Europe in the seventh Century AD.

The Viking invasions seriously disrupted English society from 793 onwards, and Viking invasions, from their bases in Dublin, were a particular problem on the west coast of England.

But the Viking invasions still left the English power structure in existence.
This was not the case with the Norman Conquest, which was accompanied by land grabbing Norman French colonists, who decapitated the traditional English society, dispossessing the native English landholders. In many respects the results of that conquest on land ownership in England survive to this day.

On the other hand, the English system of common law, based on judges’ decisions in individual cases, rather than on statues or codes, survived. Tombs claims the common law was the first national system of law in Europe.

The population of England tripled between 1100 and 1300, and it supported a forward military policy by the Kings of England in France, Ireland and Scotland.
That population growth, and the forward military policy it supported, came to an abrupt end with the Black Death of 1349, which halved the population and led to a major labour shortage.

The Reformation affected England very differently to the way it affected Scotland and Ireland.

In England a compromise religion, incorporating elements of Protestantism and Catholicism, was imposed from the top by the King.

In Scotland, Protestant Presbyterianism grew from the bottom upwards but was never embraced by the Scottish royal family(the Stuarts).

In Ireland ,the Protestant Reformation was rejected by both the Old English settlers and the Gaelic Irish, but for different reasons.

Prior to the Reformation, the monasteries in England provided a social welfare system for the people. When the land of the monasteries was taken over by the King, a substitute Poor Law system was eventually introduced in 1601.

The Parish became the unit of government and the landowners its financiers. This system worked disastrously badly when put to the test in the Irish Famine of the 1840’s.

Another seminal event was the overthrow of the legitimate King, James the second in 1688, by his usurping son in law, William of Orange.

Among the rights proclaimed by William, to win support against James, were

+ The right to bear arms
+ The right to trial by jury and
+ the right to frequent elections and sessions of parliament.

Interestingly these rights are considered now to be basic “American rights”, but their origin is in the English struggle against James the Second.
William also had the legislation passed which still disqualifies a Catholic from being King of England.

Even in the 19th century, religion, rather than social class, was the better predictor of how the English would vote. Anglicans were Tory, while other Protestant groups tended to vote Liberal, and later Labour.

In the 18th century, 80% of English tax revenue was spent on warfare. In the early 19th century, the “English” Army relied disproportionately on Irish and Scottish recruits. The Welsh were more pacifist inclined.

Thanks to its Navy, the UK became, in the 19th century, the dominant force in world trade. It did 20% of all the trade, and owned 40% of all the ships on the high seas. One has the sense that advocates of Brexit think that that is still the case!
The cost of the First World War was something from which England never recovered. Even by 1929, before the Great Crash, its exports were still 20% below their 1913 level.

England could have made peace with Hitler in 1940, and nearly did so. The world is a better place for the courage they showed in not doing so. Neutrals should not forget that!

England today is living beyond its means.

In 1996 people were saving 10% of their income. By 2007, they were spending it all.
The euphoria generated by an unsustainable balance of payments deficit may lead English voters to make a very bad mistake on 23rd June.

WHY I BELIEVE THE UK SHOULD STAY IN THE EU

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Stonyhurst College

THE EU IS A VOLUNTARY UNION

The fact that the British voters are free to have a referendum, and free to decide to leave the
European Union shows that the European Union is a voluntary Union.
It is not an Empire, which something a country would not be free to leave.
Nor is it a Federal Union like the United States, which does not permit its member states to leave either.
The EU’s voluntary character is one of the reasons why a number of states are still looking to join the EU.

THE FIRST TIME IN 60 YEARS ANY COUNTRY HAS CONSIDERED LEAVING

The 23 rd of June 2016 will, however, be the first time in the EU’s 60 year history, that any state has contemplated leaving.
This is a serious matter not just for Britain, but for all the countries of the EU.
So British voters, acting as as citizen legislators on 23 June, ought to think of the risks, that a British decision to leave might create for neighbouring countries in the EU, like Ireland. Voters here in Lancashire need to think about the consequences for peace in Ireland of the deepening of the border in Ireland that would flow from a Brexit decision on 23 June.

They also should consider the risk that Britain deciding to leave would create a precedent that would weaken the bonds that hold the remaining 27 countries together. The Parliament in Westminster has passed to voters the responsibility for deciding if a possible breakup of the EU would really be good for Britain, and for Europe too. It is a big responsibility.

STABILITY IN EUROPE HAS ALWAYS BEEN IMPORTANT TO BRITAIN

Stability in Europe has been a long term British goal.
Edmund Burke in the 1790’s favoured a Commonwealth of Europe.
Castlereagh worked for a Concert of Europe, with regular Summit meetings like the EU now has, after the end of the Napoleonic Wars.
Winston Churchill, in 1930,advocated a United States of Europe.
These statesmen did not advocate these ideas out of some sort of dewy eyed sentimentalism. No, they had a hard headed appreciation of the fact that stability on the continent meant greater security for Britain, and they made their suggestions to achieve that end.

Now it is British voters, not British statesmen, who must decide what is best for Europe,

+ a Union with Britain on the inside, or
+ a fractured Union, which Britain has left of its own free will.

BREXIT COULD DOUBLE THE REGULATORY BURDEN

We hear much about EU Regulations and the burdens they impose. But even if Britain left the EU, it would still have regulations of its own on things like the environment, financial services and product safety.

In fact, to the extent that a Britain that had left the EU wanted to sell goods or services to Europe, it would have to comply with TWO sets of regulations,

+ British regulations for the British market, and
+ EU regulations for the EU market, including Ireland.

Arguably the duplicated post Brexit regulatory burden on British business would be greater than the present one.

A UK/EU TRADE DEAL COULD TAKE YEARS TO NEGOTIATE

Some believe that the UK could leave the EU, and then quickly negotiate a free trade agreement which would allow British firms to go on selling in Ireland and the other EU countries.
I am sure an agreement of some kind could eventually be worked out, but it would not be quick.
Switzerland negotiated trade agreements with the EU, but that took 9 years.
Canada negotiated a Free Trade agreement too, but that took 7 years.
The British Agreement would be much more complicated than either of these, because it would involve new issues like financial services, and freedom of movement ,and access to health services, for example for Britons in Spain. It would have to cover agriculture.
Even with maximum goodwill from the European Commission, a post Brexit EU trade agreement with Britain would become prey to the domestic politics of the 27 remaining EU countries, each of whom would have their own axes to grind.
There would be a lot of uncertainty, over a long period.

STAY IN, AND MAKE EU BETTER

I believe British people should accept that entities like the EU, which provide a structure, within which the forces of globalisation, can be governed politically are essential, if the prosperity that flows from globalisation is to be shared fairly.
Rather than leave, Britons should consider how they can make the EU better than it is, and there is plenty of scope for that.

Speech by John Bruton, former Taoiseach of Ireland, in Stonyhurst College, near Clitheroe in
Lancashire on Sunday 29 May at 5pm

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