Brexit In Name Only?

Here are some of the things you might not have heard about post-Brexit Britain: since the vote wages are up by 2.8 per cent, unemployment the lowest in 43 years, more people are in employment than ever before, manufacturing orders are at their highest level since 1988. Exports are up almost 10 and a half per cent, more inward investment projects than ever before and sterling is the strongest currency in the G10.

If you live across the channel or skim the pages of the Economist, the Financial or the New York Times and I were to take a stern guess, that's not the narrative you've been hearing about. You've heard something different. You've probably heard a kind of begrudging pessimism from remain-supporters. A tired a dreary bunch who push back the date of the apocalypse like they were doomsday occultists.

Oddly enough, it's the most euro-enthusiastic who expect Brussels to be the nastiest in negotiations. Something has changed though; most eurocrats no longer speak of reversing the vote to leave the European Union. Instead, they're pushing for a United Kingdom that ever itches towards effective membership, where the new dividing lines are drawn over the custom's union and the single market.

Reducing the UK to a kind of non-voting member. We'll still be subject to EU court rulings, EU regulation, EU tariffs, freedom of movement and we shall continue to send large cheques to Brussels. The only significant change is that we'll lose our veto and our vote in the European Parliament, "taxation without representation" if taking back control meant anything, it means rejecting a bad deal like this one.

Consider it this way, last year when the EU triggered Article seven and carried out infringement proceedings against Poland, a member state accused of packing its own courts, the EU used exactly that procedural device. It stripped Poland of its representation in parliament, something often considered its most severe sanction, available.

What the EU is offering us as its negotiating terms and what Theresa May has effectively taken as her "Backstop agreement" if no deal over the Irish border is reached, is to impose on ourselves, is its most severe sanction. Something no reasonable person could ever accept.

The problem coercing us toward this stalemate is much more basic than a lot of people think, we have at least one chamber of parliament trying to tie the hands of the Prime Minister, and steer as a backseat driver. Once that has never really accepted the result of the referendum, and if voting for any non-sensical amendment to the withdrawal bill will claw them some kind of personal victory, they'll do it.

Staying in the Custom's Union would give Brussels absolute control of our trade policy with zero input from us, we would have no ability to sign our own free trade agreements and be reduced to rule-takers, not rule-makers. A Brexit in name only. But it's even worse than that. If we remain as a non-voting member, then we have to apply all the rules and regulations agreed upon in an FTA with a third country, without them having to reciprocate.

Goods that cross the EU custom's border from the rest of the world could face anywhere up to twelve-and-a-half-thousand different taxes, as well as many non-tariff barriers and some goods may be part of a pan-European supply chain that requires them to cross the border several times.

Neither of these arguments is a serious obstacle to leaving the Custom's Union. Both the head of HMRC and his equivalent in the Republic Ireland have said that there's no need for a hard border, that people can make their customs declarations, online and in advance in the same way they make their tax declarations.

What we could or should do is uphold our promise not to impose any physical infrastructure on our side of the Irish frontier, then we leave it to the rest of the EU to negotiate a trade agreement that involves mutual recognition rather than common standards. So that, for example, the sale of a good approved in the UK automatically licenses it for sale in the EU, and vice-versa, a trader who practices in Paris or Berlin automatically has the right to so in London.

As for the second of these, the degree of disruption is a matter of Government policy, once we leave we can set our own tariffs on imports. We can take back control of our trade policy and have goods imported more cheaply. Standards for goods like manufacturing car parts or washing machines are set at world standards so it's hard to believe non-tariff barriers would be an issue. This is an area where a trusted trader scheme might work. Paying additional customs duties on exports only becomes an issue if the Government doesn't secure the zero tariff, zero quotas bilateral free trade deal, which is subject for the next phase of negotiations. 

Leaving the Custom's Union doesn't mean leaving the Common Transit Convention, which is the agreement signed by many non-CU members, that facilitates free trade, as frictionless as possible all the way from non-EU Iceland to non-EU Turkey.

Though, as always, there are political motives being put ahead of economic sense, we've given up in almost all our bargaining chips with hardly even a paltry concession from Brussels. Our security guarantee is now unconditional, our divorce bill is not tied to a trade agreement, preparations for 'no-deal' are not being made, Britain offering the hand of friendship is being shot down, and in all honesty, at this stage in the negotiations, I'm getting worried.