John Bruton

Opinions & Ideas

Category: United Kingdom

New Fault lines in Europe…..the political consequences of Brexit

If one reviews European history over the period since the Reformation five hundred years ago, the role that England has sought to play in Europe has been that of holding the balance between contending powers. It used its naval strength, and the overseas colonies  its naval strength allowed it to hold, to exercise that balancing European role.

At no time in the last 500 years, did the UK seem to disengage from, or turn its back upon, continental Europe. Indeed England felt it so much a part of continental Europe that Henry V111 actually contemplated  being a candidate for Holy Roman Emperor.

Rather England sought to be sufficiently involved in Europe to exercise its balancing role effectively, but without being so intimately enmeshed in continental issues, that it lost its freedom of action. England’s extension of its power to Ireland and Scotland were contributions to its goal of defence against, and influence over, continental Europe.

That same motivation lay behind the decisions the UK took to go to war in August 1914 and September 1939… that of maintaining a balance in Europe

The position that the UK held in the EU on 22 June 2016, the day before the Referendum, could be said to have been a perfect expression of that traditional English approach. The UK was having its European cake, and eating it at the same time.

The UK was a full voting member of the EU, but was exempted from aspects of EU policies that it might have found too entangling, like the euro, the Schengen passport free zone, Justice and Home Affairs cooperation and the Social Chapter of the EU Treaties.

But as a full voting member, the UK could still influence the direction of the EU, and, if necessary, slow down developments it did not like,  such as a major role for the EU in defence, where the UK preferred the job to done by NATO.

The UK’s budget contribution had been modified through a rebate, and agricultural policy had been modified in a direction sought by the UK.

The UK, it could be said, had the best of both worlds the day before the Referendum.

It was sufficiently IN, to exercise influence on the EU, but sufficiently OUT of it, to maintain the sort of freedom of action that befitted its historic role.

WHY IRELAND SEES THE EU DIFFERENTLY

Ireland’s position is very different from that of the UK.

It has different, but not incompatible, priorities. They explain why Ireland is determined to remain in a strengthened European Union.

Like most of the smaller and medium sized powers in Europe, Ireland does not have the military or economic strength to exercise the sort of freedom of action that a bigger power, like the UK, France or Germany, could exercise. Whereas bigger countries might find European rules to be, at times, a slightly inconvenient restraint, a smaller country finds these common rules a source of protection, security, and freedom.

For a smaller country, the common rules guarantee it against unfair competition by an overweening bigger neighbour. They make the markets in which it competes predictable, open, and free of arbitrary behaviour. The common rules that the EU makes, and enforces, enable a  country like Ireland to compete on equal terms for international investment, something that would not be the case if bigger countries were unconstrained by  a rule based system.

Even in fields in which it might not be directly involved, like defence, a smaller country, like Ireland, benefits from the fact that bigger countries cooperate, through common organisations, like NATO and the EU, to preserve and defend a peaceful, and secure, space in its vicinity. Without peace in Western Europe in the preceding fifty years, there would have been no Celtic Tiger in the 1990s!

Now that the people of the UK have decided, in a Referendum, to quit the European Union, much is changed.

THE UK IS GOING BEYOND THE REFERENDUM MANDATE

The UK government has decided to go further than the requirements of the referendum decision of 23 June 2016, and to leave the Customs Union, and the European Economic Area as well, and to reject any jurisdiction of the European Court of Justice, adds to the difficulties.

It changes the context in which common threats must be faced, by both the UK and Ireland. Brexit may be an exclusively British initiative, for which Britain is wholly responsible, but its effects will be felt by others.

This is most topically illustrated by the question of information sharing on terrorism between the 28 EU states, including the UK.

This sharing is done under the Schengen Information System, which the UK can access as an EU member, and where disputes about what can be shared can adjudicated objectively  under the aegis of the European Court of Justice.

As a non EU member , the UK will  have to negotiate a special deal  to get access to this information. Access may not be automatic, particularly if the UK continues to reject ECJ jurisdiction on disputes about  what may, and may not, be shared, and how.

Now that the UK General Election has failed to endorse the Prime Ministers vision of a hard Brexit, the parties who will be forming or supporting a new government here have the opportunity to reopen some of the question like the Customs Union and acceptance of ECJ jurisdiction in certain areas. I hope that these are thoroughly looked at again, in an open minded way in the inter party negotiations and the options properly debated. That debate did not take place in the General Election campaign at all.

THE EU ALLOWS THE MAKING OF COMMON RULES….IT  ALSO ALLOWS THEM TO BE AMENDED, INTERPRETED AND ENFORCED, IN A CONSISTENT AND EFFICIENT WAY

The example of EU cooperation against terrorism illustrates the fact that EU has provided the UK, and its fellow EU member states,  with a common system for

  • making,
  • amending,
  • enforcing and
  • interpreting

common rules on matters as diverse as food safety, aviation, intellectual property protection, and consumer protection in the purchase of financial products.

The fact that the rules are now common to all, means that food can be sold, airline competition facilitated, patents respected and savings protected across the whole 28 countries of the EU.

The fact that the rules can be amended in a single legislative process for all members saves a lot of time.

So does the fact that they will, if necessary, be enforced effectively and uniformly across Europe, under the supervision of the European Commission.

The fact that these common rules will be interpreted, in a uniform way across the whole of Europe, under the aegis of the ECJ, also avoids all sorts of confusion, haggling and duplication.

Without the EU, none of this would be the case.

It is really important for a business that seeks to sell goods across Europe to know that the  standards the goods must comply with will be the same everywhere and that these rules will be enforced and interpreted in a consistent  way in every EU country.

Outside the EU, to open EU markets to its exports, the UK will now have  to negotiate a new deal on each topic, then agree a separate procedure for  future amendments to  that deal, and agree procedures  for enforcing and interpreting the deal.

This is what the Swiss, with their 120 different Treaties with EU, enjoy. A lot of work!

It is possible to envisage, with a huge one off effort of political will on both sides, the completion and ratification of an initial Trade and Services agreement between the UK and the EU sometime in the next five years.

An equally daunting task will come afterwards, when one has to update, interpret, and ensure adequate enforcement of, the initial agreement. The opportunities for gamesmanship by commercial and political interests, for opportunistic blocking minorities, and for sheer bloody mindedness are easy to imagine.

Everything will be up for grabs each time. Bureaucracies will have never ending occasions to justify their separate existence.

But that is the path the UK has chosen.

BREXIT NEGOTIATIONS WILL DIVERT TIME AND TALENT FROM MORE IMPORTANT MATTERS

It will, I regret to say, involve the diversion of top level official talent, in 28 capital cities, away from anticipating the challenges of future, and instead towards reopening agreements made over the past 44 years.

Our most talented civil servants will be taken up with digging up the past, rather building the future. It is a tragedy.

The Brexit process will not be like a member leaving a club of which he or she no longer wishes to be a member, which is an easy enough process, once the bar bill has been settled.

It will be much more like a divorce between a couple, who have lived together for years, have several small dependent children, a mortgage, and a small business they had been running together. Not only have past bills to be settled, but future liabilities have to be anticipated, decisions made about the running of the business, and rights and responsibilities in respect of the children, agreed.

It would be naive to think that the divorce between the UK, and the other EU countries, including Ireland, will not leave scars. I hope that is all they will be, scars, that will gradually become less visible.

The financial terms of Brexit will be important, as they are in any divorce. They will encompass the future as well as the past. One should remember that Switzerland and Norway contribute to funds to help poorer EU countries to whose markets they have access through arrangements with the EU. It is unlikely to be different for the UK, but if we are to have a constructive negotiation on financial contributions, we also need to have a constructive discussion of the terms of UK access to the EU market.

As the initiator of Brexit, the UK has the primary responsibility to make it work for both sides.

Negotiators on both sides should remember the wise words of an Assistant US Secretary of State in 1945;

“Nations which are enemies in the marketplace, cannot long remain friends at the council table”.

Bitterness in trade negotiation can poison other forms of cooperation. The initiators of Brexit in this country may not have given much thought to that, but those who will negotiate it now,  have a duty to think about it.

IRELAND’S IMPORTANT ROLE

Everyone must work to ensure that no open wounds remain at the end of the negotiation. I am sure that, as a full, loyal and active member of the EU, Ireland will work tirelessly to minimize misunderstandings, to interpret UK concerns for our EU colleagues, and vice versa. As the only English speaking member of the EU, I expect Ireland will at times also have a role in interpreting the United States for our European Union colleagues .

The best way of avoiding leaving open wounds when the negotiation is finished, is through timely anticipation of the things that could go wrong.

I hope that some of the things I say this evening will help in that regard.

FISHERIES

Starting closest to home, we will have to reach agreements on the highly emotional and symbolic issue of fisheries. Fish do not respect territorial waters. While fishing boats can, in theory, be restricted to territorial waters, fish cannot. Overfishing in one jurisdiction affects the livelihood of fishermen in another. Conservation is vital. Who will adjudicate on this, ten years from now? Will there be quotas? Who will allocate them? In the absence of agreement, one can easily envisage clashes, even physical clashes, in seas around us.

NORTHERN IRELAND

Also close to home, there is the issue of Northern Ireland. Originally, when the UK and Ireland joined the EU in 1973, Northern Ireland was the subject of a de jure, if not de facto, territorial dispute between the two countries. As a result of the improved relationship between the two countries that flowed from their common membership of The EU, and as a result of a great deal of creative thought and mutual concession, that issue has been resolved.

Now Brexit has intervened.

The two big parties in Northern Ireland have taken opposite sides on Brexit.

They have revived the issue of territorial sovereignty.

Both these parties seems to be more comfortable agitating about their irreconcilable demands on territorial sovereignty, than engaging in  the day to day drudgery of Ministerial responsibility in a power sharing Administration,  in a time of limited budgets. It is time for Ministers in Stormont to go back to work.

In the past, Prime Ministers and retired statespersons could fly in to Belfast,  to provide cover for a new compromise between the parties that allowed them to get back to work.

As Brexit will absorb so much of everyone’s time in coming years, the scope for this sort of high profile counselling will be less.  Reality therapy may be needed.

The scale of border controls in Ireland, and at ports on either side of the Irish Sea, and of the English Channel, will depend on the eventual trade deal between  the UK and EU, if there is one, and on how it is interpreted over time.

The checking of compliance with rules of the origin, labelling and safety of goods will cause delays.

Even if there is a special arrangement for Northern Ireland, these matters will have to be checked somewhere, at some border, or in some port, somewhere. Such checks are a  necessary requirement for the free circulation of the goods in question in EU Single Market. I have no doubt that this is well understood here in Britain, given that Britain, under the leadership of the late Lady Thatcher, did so much to create the EU Single Market. Now that the UK is leaving, I can assure you that Ireland will be doing everything it can to preserve and enhance that remarkable achievement …the Single Market

The genius of the combination, of common EU membership of the UK and Ireland, with the Good Friday Agreement, reduced the sense of separation between both parts of Ireland, and between each part of Ireland and the island of Britain.

That made the two communities in Northern Ireland more willing to live with constitutional and institutional arrangements, that they might otherwise have regarded as less than ideal. That benign combination, of the Good Friday Agreement and joint membership of the EU, will now be brought to an end.

WHY HAVING A COMMON COURT, AND CONSISTENT INTERPRETATION, CAN HELP

As I mentioned already, Brexit has the potential to complicate cooperation between 28 or more European countries in the struggle against terrorism. Cooperation is much easier between countries adhere to common standards, uniformly interpreted under the aegis of a common European Courts system. Information can more easily be shared, new terror threats identified, and common responses agreed, in a common European system than would be possible if all we have between the UK and the EU are a series of ad hoc bilateral agreements.

Without commonly agreed protections, cooperation will become more difficult, because one will no longer have the same assurance about how the receiving country will treat the people, or the information, that one gives over.

THE DEFENCE OF EUROPE

As far as military security is concerned, the problem is less acute, because the UK will remain a member of NATO.

But, as with police cooperation,  things will not stand still.

It is likely that greater use will be made of Article 42 of the EU Treaty which allows for a common security and defence policy, with operational capacity, to be developed. The UK  used to be able to slow down use of these EU powers, and did so because it wanted any action to be under the aegis of NATO. After Brexit that will no longer be the case.

Mutual solidarity will be reduced. Outside the EU, the UK will no longer be able to benefit from the legal obligation, imposed on all EU states, by Article 222 of the EU Treaty, of help where an EU state is

 “ the object of a terrorist attack or the victim of a natural or manmade disaster”.

Outside the EU, the UK will not be taking part in meetings of the European Council which , under Article 222 must  “regularly assess threats”, whether  from within and outside the EU.

It is impossible to predict the difference the absence of the UK will make, but I am sure that regular meetings with EU colleagues, even when there is no urgent threat to be tackled, greatly facilitate speedy action when a threat does arise. UK Ministers will have less informal, casual, or routine contact with their European counterparts. Meetings will have to be set up specially.

From an Irish point of view, a lack of ongoing contact between the UK and EU could have negative consequences. A threat to the UK interests is very often a threat to Irish interests too. For example, Ireland has the same electricity grid as the UK, and our air space and territorial waters are contiguous, as is our territory on land. A threat to one of us is potentially a threat to both.

Other fora for joint work between the UK and EU states will need to used more fully.

PROTECTING KEY SHARED  INFRASTRUCTURE FROM ATTACK

Under Article 3 of the NATO Treaty, NATO members are working on “Resilience”, namely the protection of the critical infrastructure of member states. This would include the electricity grid, the commercial and health communications network, and air traffic control.  It will also involve anticipating future threats, based on the acceptance that greater interdependence across borders makes modern societies more vulnerable.

Ireland is not a member of NATO.

Now that the UK is leaving the EU , Ireland , as a member of  the NATO Partnership for Peace, may, however , have an interest in cooperating with all its European neighbours, including the UK, in this work on  the Resilience of shared networks. This would be for the protection of our own Irish people.

Ireland will also find that it is in its own interest to ensure that the EU, using Article 222 of the EU Treaty, actively helps member states that encounter threats.

Given the increasingly self oriented attitude of the present US Administration, it will be in nobody’s interest to allow Defence policy become a fault line between post Brexit Britain, and the European Union.

Working together on these matters is not a bargaining chip for negotiation, it is in the  existential interest for both parties.

So too, and for similar reasons, is the continued close cooperation between the EU and the UK on climate change.

BREXIT NEGOTIATORS NEED TO REMEMBER HOW MUCH WE HAVE IN COMMON

So when the Brexit  negotiations become fraught, as they undoubtedly will, UK and EU negotiators need to remind themselves that we have more in common than divides us, and that we each live, close beside one another, in a continent whose global weight is much less than it was 100 years ago.

In 1900, we, Europeans, made up 25% of the world population, now we are barely 7% .

At the other end of the Eurasian land mass, China will double the size of its economy in the present decade. It adds to its GDP by an equivalent of the entire GDP of Turkey….every year.

China has ambitious plans for its global role, and China has the executive coherence necessary to realize those goals.  It is thinking in ambitious geographic terms .It is promoting global connectivity through its “One Belt, One Road” concept.

The UK’s access to that Road, across the Eurasian land mass, runs entirely through the EU.

T he access of Ireland to that Road runs mainly through the UK!

I will now turn to the internal dynamics of the EU itself, as I expect they will evolve in coming years.

NEXT STEPS FOR THE EU, NOW THAT THE UK IS LEAVING

The European Commission has produced a White Paper which sets out five, rather stylised ,  scenarios.

These scenarios are

  • Continuing on as we are
  • Doing nothing but maintaining the Single Market
  • Allowing countries that want to go ahead with more intense integration, to do so within the EU legal order, and with the possibility for others to join later
  • Doing less more efficiently
  • Doing much more together.

Given that it is difficult for 27 countries to agree on new tasks (It was much easier when there were only 9 or even 15 members), I think the first option, continuing on as we are, will be the easiest to follow. This is especially the case if the EU remains unwilling to amend its Treaties

The last option, doing much more together, does not have public support at the moment, but that could change suddenly, if some external shock made it easier to overcome the normal resistance and inertia. Among the activities envisaged, under the doing much more together option, are a single European anti Terror agency and a single coast guard. These are not farfetched ideas, and indeed may be inevitable if passport free travel across member state boundaries is to continue.

The option of doing nothing, but maintain the Single Market. is not very helpful in my view.  In truth, it is almost impossible to agree where the Single Market ends, and other policies begin. The Commission argued  that this ”Single Market Only” option would make it more difficult to conclude more or deeper international trade agreements, because differences in standards would persist within the EU.

The option of “doing less more efficiently” is not very different. It would involve pursuing Single Market integration vigorously, but going slow on regional policy, and on social and public health policies that do not relate directly to the Single market. This option may appeal to net contributor countries, like Germany and perhaps Ireland, but would not appeal in Central and Eastern Europe. It may appeal to outsiders like the UK, Norway and Switzerland as it might reduce the fee they would pay for access to the Single market. But it would be strenuously resisted by many poorer EU states.

The idea of allowing some countries to “go ahead without the others” is one that has been around for a long time, and is actually provided for in Title IV of the EU Treaty governing what is known as “Enhanced Cooperation”.

While this provision has not been much used, it could be said that the euro, and the Schengen  border control free zone, are already  forms of enhanced cooperation.

I do  not see Enhanced Cooperation  as an ideal way forward for the future, because it dilutes the democratic unity of the EU, and this is already put under enough strain by the division between Euro and “not yet Euro” members. The Commission saw this scenario as allowing some countries to go further ahead on defence cooperation while other members might hang back.

MORE COMMITTMENT WILL BRING MORE INFLUENCE

It has, however, to be recognised that influence of a member state in the EU will be commensurate with its commitment and solidarity to and with other EU members.

A country that only wants to take part in policies from which it will gain, while going slow on things that might involve costs for it, will have less influence in the EU, and might not receive solidarity when it needs it, but it is hard to quantify this.

Putting it another way, an EU which encourages some countries to go ahead while others hang back could quickly divide between” policy maker” countries,  and “policy taker” countries. This is why Ireland has traditionally resisted a “two tier” Europe.

BUT WHAT DOES EU PUBLIC OPINION WANT?

Public opinion also needs to be taken into account, in working out the priorities of the new EU without the UK, and  public opinion on what should be EU priorities varies widely between countries.

When citizens in the 28 member states were asked in April 2016, just before the UK Referendum, what they wanted the EU to prioritise, they came up with quite different answers in different countries.

When it came to fighting against Terrorism, 80% of Greeks wanted the EU to do more, and 69% of Italians did,  as against only  33% of the Dutch and  44% of Danes. At that time, 66% of UK citizens wanted the EU to do more against terrorism, but then decided to leave anyway.

After France, 55% of UK citizens in April 2016 perceived their country as being under  a high threat of a terrorist attack, as against  only 11% of Irish people, 9% of Latvians and 8% of Estonians.

This was not the only contrast.

69% of Swedes and Spaniards wanted the EU to do more about the Environment, but only 28% of Estonians did .

Understandably, at the height of the Syrian asylum seeker crisis, EU action on Protecting External Borders was a priority for 73% of Greeks, but  only 43% of Irish people and  35% of Swedes and Latvians wanted the EU to prioritise that.

The dividing lines on whether the EU should do more on Security and Defence were quite revealing.

Overall and on average, 44% of EU citizens  felt the EU should be doing more about Security and Defence.

But, to my surprise given their proximity to Russia, only 30% of Latvians and Estonians, and 25% of Danes, did so.

In contrast, 60% of Greeks and 56% of Italians felt the EU should do more on Security and Defence. 56% of French citizens felt the EU should do more, but only 41% of Germans, which suggests that , a year ago anyway, there was not an overwhelming public demand for an EU defence policy.

But that was before the election of Donald Trump, and his disturbing omissions on European Security during his recent visit to Europe.

ENERGY SECURITY

Finally, given the low oil prices at the time, it is perhaps not surprising that so few European felt the EU should be doing more on Energy supply issues.  Yet a Single Energy market was identified as a priority issue by the European Commission even in their “Continuing as we are” scenario I mentioned earlier.

In 2016, only 36% of EU citizens felt the EU was not doing enough on the issue of Energy supply. The greatest support for more EU action on Energy supply was  in Greece  and Spain ( both 54%). But in the Czech Republic, only 18% felt the EU should do more on Energy Supply questions.

Given that Ireland is so completely dependent on, what will soon become a non EU country, for access to the international  electricity grid, it interesting to note that support for a common EU policy on Energy Supply was below the EU average in Ireland, at a mere 33%.

I expect that that will change and that Ireland will seek assurances on continuity of supply in any Brexit Agreement, and will want the support of its 26 EU partners in that.

THE OUTCOME OF THE UK GENERAL ELECTION

The recent UK General Election result did not endorse Mrs May’s very specific plans for a hard Brexit. The loss of support for the outgoing government in London, and in university towns, underlines this.

It now looks as if the next government will be a coalition of some kind between the Conservative Party and the Democratic Unionist Party (DUP).

Agriculture will be the subject to watch in any DUP/Conservative deal.

How will the incomes of farmers in Northern Ireland be protected and how will freedom of access for Northern Irish food products to the EU market south of the border be preserved?

Given the commercial interest many Democratic Unionist supporters have in trade across the border in Ireland, the Conservative Party may have to drop its insistence on leaving the EU Customs Union, to avoid the necessity of extensive and time consuming checking of goods crossing the border.

As a Unionist Party, the DUP will favour UK wide solutions rather than a special deal for Northern Ireland alone, and this may help ease the impact of Brexit on East/West trade between Ireland and Britain as well. That would be welcome.

If it were to decide to stay in the Customs Union,  the UK could of course, not do trade deals of its own.

But I believe there was little evidence  the  deals UK could do, outside the Customs Union,  would compensate it for the  deals it would lose by leaving it,

  • 295 trade deals, and
  • 202 deals on regulatory cooperation.

I hope the people of the UK will now have the sort of honest detailed, sector by sector, debate on what Brexit might mean, a debate that they so markedly failed to have during the General Election campaign.

John Bruton, former Taoiseach, delivering the Grattan lecture in the Irish Embassy in London on Monday 12 June 2017

 

THERESA MAY’S ELECTION

Theresa May has decided to call an early election, before the practical outworking of her Brexit strategy becomes obvious to voters. She wants to be free to modify her strategy, and ,for that, she needs a bigger parliamentary majority.

She claims otherwise. Instead she says she is calling the election because Opposition parties oppose her Brexit strategy. They don’t oppose it, actually. They have cooperated with it, to a point that makes little of parliamentary sovereignty.

The only opposition party that opposes her strategy outright are the Scottish Nationalists, who take that position because that is the way Scotland voted in the Referendum. In any event, the Scottish Nationalist Party could not bring Mrs May’s government down on Brexit, unless Labour, the Liberal Democrats and, most importantly, a significant number of Mrs May’s own Conservative MPs, voted with them, which is not at all likely to happen.

Rather more bizarrely, Mrs May justifies her call for an immediate General Election on the ground that the Labour Party has threatened to vote against the final agreement she may come back with, in two years time. What does she expect? That the main opposition party would give her a blank cheque on the terms of Brexit?!

Usually negotiators actually find it useful to be able to say, when looking for a concession, that if they do not get it, the overall deal might be opposed in Parliament .  If she is to be believed, Mrs May apparently wants to give up that negotiating chip.

Mrs May ostensibly defend the sovereignty of the UK Parliament. But now she is calling an election because the opposition will not promise not to exercise their sovereign parliamentary rights.

My own sense is that none of the reasons she has advanced are the real ones for which she has sought an early election.

She is seeking an election to increase her overall majority, so she will no longer be dependent on a hard core group of around 60 Euro hostile Conservative MPs, who hold disproportionate power at the moment because the Conservative overall majority is so small.

For these MPs hostility to the European Union has become a religion, a religion which brooks no argument, and a religion for which any economic sacrifice can be justified, even the sacrifice of the livelihoods of their own constituents. Mrs May does not want to find her day to day negotiations with the rest of the EU subject to the whim of these people, by whom the slightest compromise  with the EU 27will be portrayed as a betrayal.

It is important to remember that Mrs May, like the rest of her Party, have never taken much interest in how the EU works, in its procedures and rules, and in the compromises that underlie its very existence. She has this in common with many politicians in bigger European countries, who treat the EU as a sideshow to national politics.

So, even though her Party sponsored the idea of holding a Referendum on leaving the EU, she did not give much thought to what leaving the EU might actually mean, until the last few months, when it suddenly became something real, something that was going to happen. In a sense, she and her party, are now finding out a lot about the EU for the first time, just as they are leaving it!

Her first reaction to the Referendum was to get her Party behind her as their new Leader. So she told the Conservative Party Conference last year that she would go beyond the mere terms of the Referendum.

She would not just leave the EU.  She would refuse to join the European Economic Area (unlike non EU member Norway), and also refuse to join the EU Customs Union ( unlike non EU member Turkey).  This hard line bought the temporary quiescence of the Euro hostile MPs, up to and including on the  terms for triggering of Article 50.

But now come the actual negotiations.

This is where Mrs May’s rhetoric at the Conservative Party Conference, meets the reality of a rules based international trading system. In a rules based international trading system, unpleasant compromises are essential if  you are to persuade others are to open up their markets to your exporters,  to your bankers,  to your planes,  and to your people.

In a rules based international  trading system, you cannot, unilaterally, make, interpret and enforce the agreed rules, in a way that suits only you. There has to be a common system, which involves some concession of sovereignty.

You often have to accept an external enforcer, like the European Commission or an International Court.

And you often have to accept an external body interpreting the meaning of the rules, someone like the European Court of Justice, or a Disputes Panel of the WTO.

But this is unacceptable to those who have made national sovereignty into a religion. It is unacceptable to some of Mrs May’s Euro hostile MPs, and also, incidentally, unacceptable to some of the supporters of Donald Trump.

I have been reading publications of Conservative supporting think tanks, like the Bruges Group and “Leave means Leave”, and they are discovering now, how costly it will be for the UK to leave the EU Customs Union.

The UK will have to introduce Customs controls on the goods bought and sold between the UK and the EU. This will involve checking where the goods came from, if they are properly labelled, if they are safe, and if the tariffs due have been paid. The delays will be horrendous.

Customs clearance alone will add 8% to the cost of goods arriving by sea from Ireland or the rest of the EU.

At the moment  90million customs declarations have to be checked in the UK for goods arriving from outside the EU. Once the UK itself leaves the EU Customs Union, UK customs officials will have to check 390 million documents!

By leaving the EU Customs Union,  the UK will not only exclude itself from duty free access to the EU market, which represent over 50% of UK trade, but it will also lose the benefit of Trade agreement the EU has negotiated with 60 other countries, which account for a further  17% of UK exports.

For example, since the EU negotiated a trade deal with Korea ten years ago, UK exports to that country increased by 110%. Leaving the EU means giving that up, temporarily, and, perhaps, permanently.

Mrs May is also beginning to discover that her hard line on immigration will have costs. 20% of employees on UK farms, and 29% of employees in UK food processing plants are EU nationals, who will lose their right to live and work in the UK.   When the UK tries to negotiate trade deals with countries outside the EU, like India, it will find that it will face demands for more Indian migration to the UK.

UK Airports will find themselves losing business when the UK has to leave the EU Open Skies Agreement with the United States. More US transit traffic will be routed through Dublin. The UK will also have to try to join the European Common Aviation Agreement as a separate member, if UK owned airlines are to have the right to fly passengers between EU airports. Rivals will not make it easy for them.

UK farmers and food producers will find themselves facing tariffs of 35% on dairy exports, 25% on confectionary, and 15% on cereals. UK lamb production will be hard hit.

If Mrs May wants to be able to make deals to avoid some of these bad outcomes, she will need the sort of flexibility, that her Euro hostile backbenchers would not allow her.

That is why I think she is calling a General Election now.

The strategy may backfire.

If during the election, she is forced into explicitly ruling out various possible compromises with the EU, she will end up with LESS flexibility that she has now. .

A lot will depend now on what the Conservative Party manifesto says about how the practical problems of Brexit will be tackled. Will it deal with these issues specifically at all?  Will Theresa May be able to get through to 8 June relying on reassuring generalities about problems like customs delays, bureaucracy, higher air fares, the end of farmer income supports, migration policy after Brexit, and the loss of access to markets for British exporters?

Given that Mrs May is avoiding taking part in debates she may be able to avoid these questions, but six weeks is a long time in politics!

THE MECHANICS OF BREXIT AND ITS EFFECT ON IRELAND

 

cropped-irish-flag.jpgI am deeply honoured to have been invited to speak here today in the company of your President, John Comer, and of the Minister for Agriculture , Michael Creed.

I worked with the Minster’s father, Donal Creed, when Donal was spokesman on Agriculture for Fine Gael, and I was the then secretary of the Party’s Agriculture Committee. That was 1969, long before we joined the Common Market.

I remember many meetings with ICMSA at that time, and was always impressed by the seriousness and realism of the way in which your organisation represents its members and agriculture more generally. The fact that your President, John Comer, comes from Co Mayo is evidence of the broad national reach of ICMSA.

I have been asked to talk about Brexit. Everything I say will be a personal opinion, not representing anyone else.

Everyone would like to know what form Brexit will take, and how it will affect Irish farmers, and the rest of the country too. Unfortunately, it is next to impossible even to begin to answer that question until we first see what the UK will actually look for. Only then can we begin to speculate in an informed way about how the negotiation might go.

In what I say today, I will try to describe the mechanics of the three negotiations that will probably take place

  • the negotiation of a Withdrawal Treaty.
  • the negotiation of Treaty covering the Future Framework of relations between the EU and the UK and, possibly
  • the negotiation of an Interim Agreement, to apply after the UK has left the EU, but before a full Future Framework Treaty has been finalised and ratified

TWO NEGOTIATIONS….ONE ABOUT WITHDRAWING, THE OTHER ABOUT THE FUTURE

Article 50 of the EU Treaty says

Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.

A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union.”

AGREEING GUIDELINES ON THE EU SIDE

It is important to note here that it will be the Commission that will do the actual negotiation with the UK, but it will do so under guidelines agreed by the Heads of Government of the 27 Member states meeting in the European Council. It will also have to bear in mind that the final deal will have to approved by the European Parliament  too.

Given that the European Council operates by unanimity, and that its members are heads of government and each of them have countries to run at home, agreeing these guidelines will take time and be difficult.

Any one country can object to any part of the guidelines.

There are wide differences between EU member states in their sensitivity to developments in the UK. It is to be expected that

  • some will emphasise a continuing right for their citizens to live and work in the UK,
  • others will emphasise trade with the UK, and yet
  • others will emphasise how the make gains for their businesses from the exclusion of UK competition(for example in financial services).

THE FUTURE FRAMEWORK FOR EU/UK RELATIONS

It is also important to note that Article 50 says that the proposed Withdrawal Treaty shall take account of the” framework” of the withdrawing states” future relationship” with the Union.

There is no guidance in the Treaty as to what this “framework” document might say.

In their Referendum, UK voters were asked if they wanted to leave the EU, but their views were not sought on the sort of framework for future relations they would approve.

Nothing appeared on the ballot paper about

  • access to the EU market for UK produced goods or services, about leaving the European Economic Area (which includes several non EU countries) or about what UK voters would want the agreement with EU to say about
  • the status of UK citizens already living in EU countries after the UK has left
  • the status of EU citizens already living in the UK or about
  • the future rights of EU or UK citizens to live and work in one another’s  jurisdictions or to avail of social services while there

DIFFERENT PROCEDURES FOR CONCLUDING THESE NEGOTIATIONS

Article 50 continues

“ That agreement  (for the withdrawal of a state) shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.”

So while the Council guidelines for the negotiation require unanimity, the actual approval of the final withdrawal Treaty can be done by qualified majority.

But there is a time limit because Article 50 goes on to say

“ The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period. “

This two year time limit applies to the Withdrawal Treaty, but there is no time limit for the negotiation the Framework for future relations.

If , within two years of the sending by the UK of its article 50 letter seeking to withdraw from the EU, a Withdrawal Treaty has not been agreed by the UK on one side, and a qualified majority  on the EU side, the UK is simply out of the EU, with no rights at all on the EU market beyond those enjoyed  by any state anywhere in the world.

This is a real doomsday scenario, but it is a realistic possibility, because the gaps in the negotiating positions between the UK and a potential blocking minority of EU states (26.3% of weighted votes representing at least 35% of the EU population) are very wide.

But, at least, the withdrawal Treaty can be approved on the EU side by a qualified majority (73.9% of the weighted votes  representing 65% of the EU population).

Agreeing the terms of the Framework agreement with the UK, of which the Withdrawal Treaty must “take account ” will be even more difficult, because this Future Framework Agreement will probably have to be unanimously agreed by ALL 27 EU states and their parliaments, unless it is a very narrow agreement covering only trade in goods.

If it is wider than this, it is likely to be deemed a so called “mixed agreement”, which is an agreement that includes matters where the competence is shared between the EU and the member states.

A ROCKY PATH TO RATIFICATION FOR A FUTURE UK/EU FRAMEWORK DEAL

In this case, every member state parliament, as well as every member state government, will have to approve the Framework agreement with the UK.

This is what happened with the recently concluded EU Agreement with Canada, which, as you will remember, was threatened with a veto by Belgium, because under internal Belgian constitutional arrangements, all five subsidiary parliaments in Belgium must agree to any international treaty signed by Belgium, and two of them did not agree.

A similar threat to an Agreement with the UK could come from a decision to call referendum  in a member state.

For example, the future of an EU Agreement with Ukraine has been put in doubt by its defeat in a referendum in the Netherlands, requisitioned by a petition of only 300,000 signatories out of a total population of 17 million, and on a turnout of slightly above the minimum required 30%.

It is easier nowadays to organise petitions online, so this could be another threat to a Framework Agreement with the UK, not just in the Netherlands, but in any other countries with similar petition/referendum provisions.

The UK could not really object to this happening because the UK itself, on 23 June, used a national referendum to make a decision affecting the whole of Europe in a profound way.

COULD THE UK CHANGE ITS MIND?

Could the UK change its mind, when it discovers that things are not turning out as its voters, and those politicians who favoured leaving the EU, hoped they would?

Article 50 says

“ If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.”

Article 49 requires the unanimous agreement of all existing member states, and of the European Parliament, to the readmission to the European Union of a member state, just as it would to a state applying to join for the first time.

In other words, the UK, seeking to rejoin the EU after having left, would be in exactly the same position as Serbia, Montenegro or Turkey is today.

A more interesting question is whether the UK, having written its Article 50 letter in March 2017, could decide, say in late 2018, just before the two year time limit  would expire in March 2019, that it wanted to withdraw the letter, and stay in the EU after all , on the existing terms?

This is not an easy question to answer.

Article 50 doesn’t say that notification once given can be withdrawn, but nor does it say that notification can’t be withdrawn.

The prevalent view is, perhaps, that notice can be withdrawn prior to actual withdrawal from the EU but the position is not clear. If revocation of an article 50 notice was not accepted by all other EU members, the Court of Justice of the European Union would have to decide the point.

This may all sound a little fanciful  at this point, but it is possible that, by late 2018, the UK might have a different view on EU membership to the one it had on 23 June 2016.

It would certainly have to organise another referendum, which could be difficult given the rigid two year deadline for complete exclusion, in the absence of an agreed Withdrawal Treaty.

But if the discussions on the Framework Agreement were going really badly, or if  the economic costs of separation were just proving greater than expected, and if prospects did not look like improving, a majority of MPs might decide to consult the voters on the possibility of taking back the Article 50 letter.

Already there is some sign that UK opinion has shifted slightly since the 23 June Referendum.

Asked in a Eurobarometer  poll last September, three months after the Referendum, whether they thought the  UK benefitted from being in the EU

  • 56%  in the UK said they thought the UK had benefitted, an increase of  5 percentage points on the previous poll and
  • only 34% said they thought it had not, a drop of 2 points on the previous poll

If that trend were to continue, things could look different in the late 2018 or early 2019.

But it would be very difficult politically to change course. National pride would be hurt.  Telling voters they made a mistake is rarely a winning political strategy……even though voters do sometimes make mistakes

CONTENT OF WITHDRAWAL TREATY

Let me now turn to what I think will be the content of the two negotiations

First ,the Withdrawal Treaty negotiation and

Second, the Framework of Future Relations negotiation

My understanding is that the Withdrawal negotiation itself is likely to cover quite a narrow, but very contentious, range of issues.

These will probably include five broad topics

  • What the UK will have to pay to leave,  what will be the UK share of any remaining financial commitments dating from its time as a member, covering matters such as pensions of EU officials , other obligations outstanding, less the UK ‘s share in EU assets
  • The mechanics and costs of moving EU institutions, like the Banking Authority and the Medicines Agency, out of the UK and into an EU country (perhaps Ireland)
  • The Rights of EU citizens already living in the UK, and UK citizens already living in an EU country. The rights of future migrants from the UK to the EU, and vice versa, will be for the Future Framework negotiation
  • The relationship of the UK with the WTO after it has left the EU

+ Special situations concerning the land boundary between the UK and the EU, as in Ireland and at Gibraltar. It is good that this being dealt with upfront, and not just buried in the wider Framework negotiations. But, obviously, the content of the final Framework deal, if there is one, is bound to affect what happens on the Irish border.

While these five issues are, on their face, straight forward, the UK contribution to the EU budget was elevated into a big issue in UK politics over the past few years. False statements were made before the referendum about the amount the UK would get back by leaving,  and a gain of £350 million a week was promised by some who now hold high office in the UK government.

So this could become a very difficult discussion.

CONTENT OF FUTURE FRAMEWORK TREATY

The Future Framework negotiation will be a much wider one and will take in matters of direct relevance to ICMSA members, such as

  • whether the EU Common External Tariff will have to be levied on agricultural products coming into Ireland from the UK, or Northern Ireland
  • how the origin of imports from the UK will be verified to ensure that they are not dumping third country products on our market,
  • how veterinary and food safety standards will be verified, and how and by whom smuggling will be suppressed.
  • whether geographic indicators will be recognised
  • if there will be a tariff free quota to allow existing trade levels to continue or if all trade will bear the appropriate tariff

The tariff issue will be particularly difficult in the food sector, because this is the sector in which the EU has the highest tariffs, and restrictions, on third country imports in order to protect the incomes of EU farmers.

Everything depends on what sort of food and agriculture policy the UK decides to follow outside the EU. Will they go for a “cheap food” policy like they had before they joined the EU 40 years ago or will they retain current supports for farmers and rural life?

There is no indication so far as the what choice they will make, at least after 2020.

Negotiations about product  safety, rules of origin, and related issues will arise with all products and services, even those to which no tariff applies, because once it has left the EU, the UK will be free to depart from recognised EU standards.

If the UK rejects the jurisdiction of the European Court of Justice, as Prime Minister May says she will, there will no longer be a referee to interpret the rules of the shared market, and all markets need a referee.

If one wants to assess the likely complexity of a Future Framework Agreement the UK and the EU will have to negotiate with one another, one has only to look at the content of the Agreement the EU has concluded  with Canada.

As well as tariffs and trade, that agreement had to cover

  • product testing and standards….would each side recognise the other side’s tests for every product or would there be duplication?
  • mutual recognition of professional qualifications….a huge field
  • the right of EU and UK firms to sell goods and services to government entities in one another’s jurisdictions
  • protection from discrimination against EU investors in the UK and vice versa
  • access to fishing grounds

The EU and the UK negotiators will not only have to reach agreement on the substance of how these matters are to be handled, but  they will also have to agree a procedure for settling disputes about interpretation, because the UK, outside the EU, will not accept the rulings of the European Court of Justice (ECJ)

But probably the most contentious issue in the Future Framework negotiation will be right of people to emigrate to the UK from the EU, and vice versa.

Control of Immigration was not, initially, one of the UK’s complaints about the EU.

The Blair government actually opened the UK to  central and east European EU immigrants, in 2004, before it was obliged to under the Accession Treaties for those countries.

But, during the Referendum campaign, immigration became the central debating point ,and leaving the EU was presented as the way of “taking back control” of immigration.

The case was over stated.

Of all immigrants moving to the UK in 2014,

  • 13% were UK citizens returning home.  
  • 42% were EU nationals emigrating to the UK. But the biggest number,
  • 45%, were non EU nationals moving to the UK.

The UK already had full “control” over 45% of all immigration which came from non EU countries, and the Minister who exercised that control then, the Home secretary, is now the Prime Minister.

But in politics, perception is sometimes more important than reality, and immigration from the EU is perceived to be a problem by UK voters.

The EU side has taken a firm line on this. There will be no participation of the UK in the EU Single market without free movement of people to work. If capital is free to move, people should be free to move too. No Single market without free movement. Discrimination on the basis of nationality is excluded within the EU, and a state should not be able to leave the EU, introduce such discrimination, but still have all the other benefits of access to the EU market. If that option were the open, others EU members would be inclined to follow the UK out of the EU.

The fact that there must be unanimous agreement, by all 27 EU countries, to the Future Framework is relevant here. Countries like Poland will not be keen on a breach of the free movement principle.

WILL AN INTERIM DEAL BE NEEDED IN 2019?

I think it should be clear, from all I have said, that finalising a Framework Agreement with the UK within the two year time frame will be so difficult as to be almost impossible.

The Agreement with Canada took six years to negotiate and it was much less complex than any agreement with the UK would be.

So what happens, in late March 2019, when the 2 year deadline is reached, if the Withdrawal Treaty has been agreed, but  if the Future Framework negotiations are still going on, with no certainty whether they are going to succeed or not?

In this case, some form of interim agreement with the UK might have to be reached. This might involve the UK leaving the EU, losing its voting rights, but still retaining full access to the EU market until a final Framework Agreement was reached.

There will be almost as many knotty questions to answer about  that sort of an Interim Agreement as there would be about a Final Agreement.

For example, what contribution would the UK  then continue to make to the EU budget?

Would there be a time limit on the Interim Agreement, and could it be extended?

Would the UK accept the jurisdiction of the ECJ during the Interim?

Would an Interim Agreement have to be approved by the parliaments of all 27 member states?

Does the EU Treaty allow for such an Interim Agreement?

CONCLUSION

My conclusion from all of this is that the decision of the UK Conservative Party to have a referendum on EU membership, without a clear alternative being known, was unwise because it will lead to a huge diversion of time and talent away from more constructive purposes.

Since the Referendum, the UK government has, retrospectively, interpreted the vote to mean a decision to leave the EEA, and leaving the European Customs Union, things that were not on the ballot paper, and are not required by its wording at all. That is undemocratic.

Brexit poses disproportionately great challenges to Ireland. It will require us to build new and stronger alliances in every EU country, and to do that we will need to understand the interests of other countries almost as well as we understand our own. We must not make the mistake David Cameron made of thinking that an understanding with Germany will deliver what we want from the EU. In the EU, every country counts.

………………………………………………………………………………………

Speech  by John Bruton,  at the AGM of the ICMSA at 4pm on Monday 28 November in the Castletroy Park Hotel, Limerick

 

THE UK NEEDS TO WORK OUT WHAT IT VOTED FOR LAST MONTH

union-jack-1027896_960_720I believe the UK itself needs to prepare a realistic proposal, taking the EU Treaty obligations of others into account, on the future relationship between the EU and the UK that it believes would be in the interest of both the UK and the EU.

That is a process that has to take place in the UK alone and not, at this stage in the other EU countries.

The UK needs to do its home work first. The UK needs to take full ownership of the challenge posed by decision in the referendum that the UK itself decided to have .

My own sense is that a relationship between EU and UK that is limited to trade in goods, and to free travel with passport controls, is easily attainable, if the UK is willing to accept EU goods safety standards.

The question is whether the UK would settle for that.

Services and movement of people are inherently inter related so this would not cover financial services exports from the UK.

On migration, the UK position is made difficult by the fact that the UK long pressed for early EU enlargement, and then, like Ireland, opened itself the migration from the new EU members without availing of the transition period.

Now, without acknowledging its own contribution to the dilemma in which it finds itself, the UK has decided to reverse all this by leaving the EU, as if the EU alone was responsible for the consequences of these UK decisions.

I fear that these contradictions within the thought processes of the UK itself will not be resolved without some sort of crisis.

From what I read, it seems to me that UK leaders are still going around the continent looking to EU leaders to solve the contradictions in the UK’s own thinking for them, which is a bit unfair.

The UK should not try to pick off individual EU states by making them special offers, because that will anger other EU states. The governments of all the 27 remaining EU states have to bring their public opinions with them too

The UK needs an agreement that all the EU states and the elected European Parliament can live with.

Ultimately all EU states are bound by the Treaties, and are required by law to cooperate sincerely with one another to “attain the Union’s objectives”.

The European Court of Justice and the European Commission are obliged to follow the EU Treaties and ensure they are respected by the member states, the Council of Ministers and the European Commission.

The Commission represents the common EU interest, and is particularly attentive to the needs of smaller states. The UK should never give the impression that it would like to bypass the Commission, by going over the Commission’s head to Berlin or Paris.

While the European Council will authorize the negotiations with the UK, it is the Commission that will do the negotiation. The European Council can issue negotiating directives to the Commission, but the European Council acts by unanimity, which leaves a lot of discretion to the Commission.

So the UK needs to come up with a comprehensive proposal that is framed in the context of these Treaties and of the needs of each of the 27 (very different) EU states.

It should probably publish that proposal, in the form of a Green Paper, before triggering Article 50.

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.

WHAT ARE THE HISTORIC ROOTS OF BRITAIN’S CONTINUING ANGST ABOUT EUROPE?

Britians Europe.inddWhy has Britain always had such an ambiguous approach to being involved in the EU?

Why did it refuse to join the Common Market in 1957, only to apply to join in 1961?

Why has it felt the need to opt out of many EU policies, and why is making a  modest contribution to the EU budget so controversial in Britain?

 I have recently read

 “Britain’s Europe,  A thousand years of Conflict and Cooperation” by Brendan Simms, an Irish historian,  who is Professor if the history of International Relations in Cambridge University in the UK.

In this excellent book, he explores the deep historic roots of Britain’s attitudes to the continent of Europe.

His underlying thesis is that England’s abiding concern has been to protect itself from unwanted intrusion by continental European powers.

Even Britain’s imperial expansion into other continents, and its development of the dominant navy in the world, were designed, Simms believes, to bolster its position vis a vis Europe.

England interfered in Ireland and Scotland, and invaded them, to prevent them being used as a base by its continental enemies. These motives, Simms argues, lay behind the Acts of Union of 1707 with Scotland, and  of 1800 with Ireland.

England made alliances with lesser powers on the continent to curb whichever was the continent’s biggest power.

First it did so to curb Spain, later to curb France, and most recently to curb Germany.

Its policy was to create a balance of power on the continent so that no one continental power would be strong enough to threaten Britain.

It always felt vulnerable to invasion from the continent, and indeed it was only thanks to luck, or to unfavourable winds, that many planned invasions did not happen. The last successful invasion was by the Dutch in 1688.

To deter invasion, England always wanted to ensure that the dominant continental power did not control the “Low countries”, now Belgium or Holland. Britain went to war against France in 1792, and against Germany in 1914, to prevent the dominant European power controlling the Low countries.

British statesmen have not been opposed to European unity on principle.

For example, Edmund Burke favoured a “Commonwealth of Europe.”

After the defeat of Napoleon in 1814, Castlereagh favoured regular European Summits.

The problem for England is that a united Europe would make the British policy or backing lesser powers to create a balance of power impossible to operate, unless, of course, Britain could do this from INSIDE a united Europe. But that would trammel its historic freedom of action.

Its continuing inability to decide on which of these contradictory options to pursue explains why “Europe” is such a toxic issue in British politics.

Brendan Simms argues that Britain “cannot be compared” to other European powers because of

  •  its economic strength,
  •  its permanent UNSC seat,
  •  its nuclear deterrent, and
  •  the size of its conventional military.

He believes that the Euro Zone will have to create a fully fledged Federal state to sustain the Euro. He believes the UK would stay out of this.

While I agree with this last point, I find both of his other arguments unconvincing.  Britain is not that different, and the euro can be sustained without a fully fledged Federal state being created. I attempted to show how, in a previous posting on this site.

This is a very timely book and deserves to be read in all European countries, including Ireland.

The balance of power thinking that motivates British policy was relevant when Europe had 25% of the world’s population and 50% of its wealth. It makes much less sense now, when Europeans are only 7% of the world’s population and have a declining share of global wealth.

Nostalgia is nor a sound policy, for Britain or for Europe as a whole. That is why UK voters should remain in the EU.

THE UK VOTES TO LEAVE………WHAT HAPPENS THEN?

The-UK-and-EU-flags-010

Paper prepared by John Bruton, former Taoiseach, on what would happen if the UK votes to leave the EU, the procedures and options available, and the implications for Ireland , the European Union and the UK itself.  

Next June the people of the UK may vote to leave the European Union. At the moment, a narrow majority favours remaining in the EU, but a large group are undecided. That group could swing towards a “leave” position, for a variety of reasons, including what might be temporary EU problems with refugees. However temporary the reasons might be, a decision to leave, once made, would be politically irreversible.

So it would be wise for Ireland to give thought now to how it might react to a decision by UK voters to leave the EU , and how it would play its hand in the subsequent negotiations. A number of scenarios will arise and Ireland needs to identify its red lines in each one of these.

THE NEGOTIATIONS COULD ONLY TAKE 21 MONTHS

The negotiation of a UK withdrawal from the EU will be done under Article 50 of the Lisbon Treaty. It will have to be a quick negotiation because Article 50 contains a two year time limit. In practice the negotiation of withdrawal arrangements will all have to be finished in about 21 months.

From the date that the UK Prime Minister informs the European Council of his/ her decision to implement the referendum decision, the two year time limit starts to run. Assuming a June 2016 Referendum, I calculate the Withdrawal Treaty would have to been negotiated, ratified, and brought into force by July 2018.

So the negotiations themselves between the EU side and the UK side would probably have to be finished at latest by April 2018, to allow time for parliamentary ratifications.

In the event that no agreement had been reached within the deadline, the EU Treaties “would cease to apply” to the UK. The UK would simply be out of the EU, without even a trade agreement.

This would be exceptionally disruptive of the UK economy, and of some, but not all, EU states’ economies. It would be particularly bad for Ireland. Our exports to the UK would be at risk, and the border would be deepened with incalculable consequences.

UNANIMITY OF ALL EU STATES NEED TO EXTEND THE TWO YEAR LIMIT

The two year limit could be extended, but only with the consent of all 27 members of the EU. If the negotiations had become contentious, or if the UK demands bore heavily against the interests of one or two states, one could see the required unanimous consent for an extension of negotiating time being withheld.

This risk of a single refusal to extend time for negotiation, adversely affects the dynamics of the negotiation, from a UK point of view, because the UK has more to lose from failure. It is not inconceivable that a populist government in a member state might hold a time extension for the UK hostage to obtain some other unrelated matter, such as debt relief. A European Parliament in election year could also be a source of uncertainty.

While a time extension would require unanimity, the actual negotiation of the terms of withdrawal would need a “Qualified Majority” within the European Council.

NO GUARANTEE OF PROTECTION OF IRISH INTERESTS IN WITHDRAWAL TREATY

That means that the terms of the Withdrawal Treaty would need to support of 72% of the 27 EU governments, collectively representing at least 65% of the total EU population. Ireland, on its own, could not block a Withdrawal Treaty that contained terms that were against Irish interests. Nor could Ireland guarantee it would be agreed on terms that would adequately protect Ireland’s interests. For example, Ireland could not necessarily prevent passport controls or customs posts on the border in Ireland.

While 72% of EU member state governments must agree to the Treaty terms, 100% of the 27 national parliaments must do so, and ratification could become entangled in General Elections in some states in the interim.

While our fellow EU member states will undoubtedly recognise the Ireland will suffer more than any other EU state from a UK withdrawal, that does not guarantee that Irish interests will be taken into account in all cases. Quid pro Quo will apply, and that could cause difficulties on vital Irish interests on EU issues that have little direct bearing on the UK Withdrawal as such.

Given the short time involved, the UK will not have the option of pursuing a relaxed post referendum exploration of different types of external association with the EU. It will probably have to decide at the outset what form of relationship it is seeking. It will have to choose among options that do not require the EU itself to change its Treaties.

The options were well described in a recent paper by Jean Claude Piris, former legal advisor to the European Council.

OPTION ONE…..UK JOINS THE EUROPEAN ECONOMIC AREA

The simplest would be to join the European Economic Area (EEA), while leaving the EU itself. The EEA allows Iceland, Liechstenstein and Norway to take part in the EU Single Market, but without being in the EU Agricultural, Fisheries, Judicial and Foreign Policies.

In the EEA, the UK would still have to contribute to the EU budget, to apply EU Single Market rules without having the say it now has in them, and to allow free movement of EU migrants to work in the UK on the same terms as locals.

Ireland’s problem with this option would be the departure of the UK from the EU Common Agricultural Policy which would raise issues of fair competitive access for Irish farm produce to the UK market. Management of Atlantic Fisheries would also become more contentious.

OPTION TWO……THE SWISS APPROACH

Less simple, would be for the UK to seek to make tailor made agreements with the EU, like Switzerland has. This negotiation would be a very complex process where tradeoffs would have to be sought between different sectors and national interests. The Swiss model has not worked well from an EU point of view, and one could expect EU negotiators to take an exceptionally tough line if this is what the UK seeks. The issue of access to the UK labour market for EU citizens would certainly be a demand from the EU side in such a negotiation.

In practice, if not in theory, the UK would have to implement EU law in all the areas for which it sought access to the EU market. This would be very problematic from the point of view of the financial services exports from London to Europe.

Once such a deal had been concluded, the EU side would be under pressure to tilt its own internal rules to favour financial service providers in the EU itself. If a system of mutual support and mutual supervision of financial service providers existed within the EU, and the UK was not part of that, there would then be valid grounds for objecting to UK financial service providers benefitting from a market they were not supporting on the same basis as EU providers.

This could hurt London, and Dublin could be a beneficiary. Outside the EU, the UK could do little to stop this. The European Banking Authority would have to leave London and there would be a good case for relocating it in Dublin.

OPTION THREE……A CANADA STYLE AGREEMENT WITH THE EU

Another option would be for UK just to seek a trade agreement with the EU, like Canada has. This option is favoured by some of those who want the UK to leave the EU, so it needs to be studied.

The first thing to say about this is that it would have to be negotiated within the two year time limit applying to a Withdrawal Treaty under Article 50, and would presumably have to be part of the Withdrawal Treaty. The existing Canada Agreement took 6 years to negotiate and dealt with a much less complex relationship than that between the UK and the rest of Europe. It is very hard to see how all this could be done in the time frame. The European Parliament would actively involve itself in the details. The UK would be excluded from the European council discussions on the topic.

A Canada type agreement would not necessarily mean continuing tariff free access to the EU for all UK goods. Some tariffs remain on some Canadian goods for the time being.

It is unlikely that a trade agreement like this, or even a Customs Union of the kind Turkey has with the EU, would allow the UK access to the EU financial services market and financial services are one of the UK’s biggest exports.

It is clear that under a Canada style agreement, the UK would have to comply with EU rules on any goods or services it wanted to export to Ireland or to any other EU member state. The UK would have no say in the framing of these rules, but it would still be bound by them.

Of course, the UK would be free to make its own rules for goods and services sold within the UK, but the downside of that would be that UK firms would then have to operate under two different rule books, one for the UK and another for the EU, thereby adding to their costs and damaging their competitiveness.

Once a Canada style agreement had been made, the UK would be out of the EU and would have no control over any further rules on new topics that the EU might need to make.

The Canada agreement is clear that it does not restrict the EU making “new laws in areas of interest” to it.

If the Canada model was followed there would be a Regulatory Cooperation Forum to cover this sort of thing. In the Canadian model, this Forum would allow

  • “exchange of information and experiences”,
  • “only provide suggestions and make no rules” and
  • “not have decision making powers”.

In other words the UK would be in a worse position than it is as a voting member of the EU.

If , after the UK had withdrawn, the EU deepened its service market further, allowing new access rights across border for service providers within the EU, the UK would miss out on this and would have to negotiate access for its service providers on a case by case basis.

The rights of the 1.8 million UK citizens now living in EU countries would also be less secure. UK citizens, living in Ireland or the continent, would enjoy only what Canadians enjoy.

WHAT WOULD HAPPEN TO EXISTING EU TRADE DEALS, AND TO EU LAWS NOW ON THE UK STATUTE BOOK?

Furthermore, the UK would have to start from scratch negotiating trade agreements with countries all over the world, to replace the trade agreements it now has with all those same countries as a member of the EU.

The UK Parliament would certainly be busy as well, in that it would have to pass new UK laws to replace all the EU regulations that are now part of UK law.

The only alternative to this would be for the UK to decide to leave all the “acquis” of EU rules and regulations, which are now supposedly so objectionable, on the UK statute book, as they are, for a long time to come.

One proponent of UK exit from the EU, Lord Lamont, admitted, in a debate with me recently, that this is what they would have to do.

Leaving the EU, only to leave EU rules on the UK statute book, seems like a lot of trouble to achieve very little!

A SECOND REFERENDUM?

There would be no second referendum on the final terms of any Withdrawal Treaty.

This has been made clear by Chancellor Osborne. That has to be his position because, if there was to be such a referendum, the choice would presumably be either to leave on the basis of the terms of withdrawal Treaty, or stay in on the basis of the EU membership exactly as it is today.

If such a second referendum was formally in prospect, it is hard to see that the EU side would have any incentive at all to offer the UK any concessions at in the Withdrawal Treaty negotiations. They would be mad to do so, because all the concessions would achieve, would be to make withdrawal more attractive.

CONCLUSION

I believe that the architects of the UK’s renegotiation/referendum strategy did not adequately consider how hazardous the voyage is, on which they have so casually embarked. They may have overestimated the EU’s political capacity to devise yet another special deal for the UK.

Ireland, for its part, will have to adopt a very tough, deliberate, and multifaceted negotiating strategy, as long as this avoidable uncertainty prevails.

GEORGE OSBORNE

George Osborne, current Chancellor of the Exchequer in the UK, is the subject of a biography entitled “The Austerity Chancellor” by Janan Ganesh of the “Financial Times”.

“Austerity” is obviously a relative term, given that, after four years of it, the UK still has the second largest structural deficit in the developed world after Japan, and debt that is £100 billion more than was planned back in 2010. Austerity is not over, in that current plans, accepted in principle by both parties are to turn the deficit of 5% of GDP into a surplus by 2019/20. Politicians who think the Northern Ireland block grant will be increased, if they protest enough, should keep that in mind.

Janan Ganesh blames this continuing financial gap on the under performance of the overall EU economy, which provides the UK with its export market for its services and goods. In that sense, Mario Draghi ‘s comment that he would do “whatever it takes” to underpin the European economy may have contributed as much to the recent recovery in the UK economy as anything Osborne himself did.

George Osborne came from a comfortable London home, did his degree in history, and could have entered many professions, but chose politics from an early age. He worked first as a political advisor to the Major Government in the Department of Agriculture during the BSE crisis, and then to William Hague when he became leader of the Opposition. Although a metropolitan Londoner, he succeeded in being adopted as the candidate for the safely Conservative Tatton constituency, near Liverpool.

He has always managed to stay close to whoever was leader of his party, and briefed several of them on how best to exploit the ordeal of Prime Ministers Questions. He has a talent for devastating one liners.

His close and trusting relationship, as Chancellor, with Prime Minister David Cameron is in marked contrast to the destructive relationship that existed in the New Labour government between Chancellor George Brown and Prime Minister Tony Blair. According to Ganesh, Osborne is an unabashed admirer of Tony Blair, as a master politician, and holds Brown in ill disguised contempt.

Osborne and Cameron do not have identical political views. Osborne is a classical liberal on social as well as economic issues. Cameron has a more sentimental streak, with his emphasis on “the Big Society”, an attempt to encourage voluntary organisations to be more active in tackling social problems.

Will Osborne still be Chancellor after the General Election?

Polls show that, while voters like David Cameron much more than they like Ed Miliband, 52% of them profess to “like” the Labour party, while only 33% “like” the Conservatives. 

Incidentally this is less than the 40%, who say they like the Lib Dems, which suggests that, despite huge efforts, the Conservatives have yet to shed the harsh image they acquired in Mrs Thatcher’s later years.

Voters have low expectations of Ed Miliband, and this means that, in the campaign, he has an easier job than Cameron, unless he makes some big mistakes.

All he needs to do is perform above very low expectations, and people will be favourably surprised. In contrast, the Conservatives will have the much more difficult task of exposing the contradiction between Labour’s professed commitment to eliminating the deficit, and their simultaneous opposition to “austerity”.

Powered by WordPress & Theme by Anders Norén

Enjoy this blog? Please spread the word :)