Article 50, Brexit, Brussels, Juncker, Michel Barnier, Negotiating, Theresa May

Not so Much a Marathon… More a Triathlon #Brexit

Written on Friday Dec 8th:

may junckerEarly this morning, Friday, December 8, the EU and the UK announced that they had reached terms on the three Article 50 issues which cover: the UK’s ongoing financial obligations to the EU; the rights of EU citizens in the UK; and issues relating to Ireland.

The EU Commission said that the agreement reached was sufficient to allow it to recommend to the EU Council (heads of government) next week that the talks proceed to phase 2, namely discussions on the “framework” of the UK’s future relationship with the EU.

Reading the various documents that have been released today it is hard not to come to the conclusion that the UK appears to have accepted the EU’s terms on all three issue. Outstanding payments from the UK to the EU are not conditional on any sort of future trade deal and will continue long into the future as commitments made by the EU28, of which the UK was a part, fall due. On citizens’ rights the European Court will have a role in defending the rights of EU citizens resident in the UK for eight years after Brexit, a political lifetime. On Ireland, the default position is no hard border.

A long way from the opening UK position when discussions got under way.
What happened during the six months of talks between the Commission and UK Ministers?

Mrs. May appears to have succumbed to what we call the “last kilometre syndrome”. You are not a very experienced runner but, nevertheless, you sign on to run a marathon. Friends advise against it, but you are determined to “take back control” of your life.

Ideally, you should put in the hours training but, as David Davis made clear this week with the impact studies that never were, the UK does not appear to have done much training for this negotiating marathon. You give it your all for the first 15 kilometres, telling yourself that this is not as hard as they told me it would be. Actually, a piece of cake.

Then you hit the wall. Very quickly it gets harder, a lot harder. Each step gets more and more difficult to take. But you keep putting one foot ahead of the other. You round a bend. You can see the finishing line two kilometres or so down the road. But you have nothing left to give. Having invested so much to get to this point, you are damned if you are not going to cross the finishing line. You do what it takes to get yourself there. Shattered.

Negotiations are not much different. You see the finishing line at 03:00 in the morning. Having spent months to get to this point you say to your team: just do it. Finish it. Sign it. We haven’t put in all this effort to fail at the last minute. They’re not asking for that much actually. We’ll sort it out later.

Over the following weeks and months the reality of what you agreed slowly becomes clear. Recriminations mount. What looked good at 03:00 in the morning looks a whole lot different, and worse, in that cold, hard winter sunshine, which show up every speck of dust.

As we see it, that is where the UK is today. Which places questions over whether the deal can hold up as what has been agreed becomes ever clearer. We have our doubts. As the influential Conservative journalist and commentator, Tim Montgomery, tweeted earlier today:

May says there’s been give and take on both sides. Correct. We give the EU extra billions that should be going into the NHS etc and Brussels takes it. This is not a “hard win” deal but surrender. And our capitulation on sequencing means no guarantee of trade deal.

So, where are we in the Brexit process?

As we emphasised in a previous Briefing (No. 23), nothing has changed. The UK will still leave the EU at midnight, Brussels time, March 29, 2019. When you are out, you are out, even if there is a long driveway to walk down before you finally quit the premises. Call it “transition road”.

The UK has asked the EU for a transition period of around two years when it leaves the EU in 2019. The EU is agreeable to this. According to EU Council president, Donald Tusk:

…we should start negotiating the transition period, so that people and businesses have clarity about their situation.”

“As you know, the UK has asked for a transition of about two years, while remaining part of the Single Market and Customs Union. And we will be ready to discuss this, but naturally, we have our conditions. During this period, the UK will respect: the whole of EU law, including new law; it will respect budgetary commitments; it will respect judicial oversight; and of course, all the related obligations…Clearly, within the transition period following the UK’s withdrawal, EU decision-making will continue among the 27-member states, without the UK.”

However, he cautioned, “While being satisfied with today’s agreement […] let us remember that the most difficult challenge is still ahead […] to negotiate a transition arrangement and the framework for our future relationship, we have de facto less than a year.”

What all this means is that, in reality, nothing will change until March 2021, at the earliest. Until then the UK will continue to act as if it were a member of the EU, except it will have no involvement in the EU’s governance processes, no Commissioner, no members of the EU Parliament, no judge on the European Court. All EU laws and regulations will continue to apply in the UK.

During the coming year, 2018, the EU will open talks with the UK on the “framework” of its desired future relationship with the EU after Brexit takes place.

This would be easy if the UK actually knew what it wanted. But it appears it doesn’t. As Chancellor of the Exchequer, Philip Hammond, admitted this week, since the Brexit vote took place in June 2016 there has been no discussion at cabinet about what future relationship the UK actually wants with the EU.

So, at some point early in 2018 the UK is going to have to tell the EU what it wants. The long-fingered discussion in the cabinet will actually have to take place. The answer will need to be a little bit more precise that we want a “deep, meaningful, special, and everlasting” relationship with the EU.

Those words might work on a Valentines Day card. Not as negotiating objectives. Can the government forge a consensus as to where it actually wants to end up? If it were easy it would have done it before now.

The real detailed discussions between the EU and the UK on the substance of the future relationship will only take place when the UK has left the EU and become a third country, after March 2019. Will a two-year transition period be long enough to agree what needs to be agreed? Probably not.

So, what happens in 2021? Either the UK leaves the EU without a comprehensive trade agreement, delayed hard Brexit, or there is agreement to prolong the transition period, never ending Brexit.

Best guess? Impossible to say. Too far away. As my good friend Denis McShane puts it, Brexit is going to squat like a giant toad on British politics for years and years to come.

Just as you are staggering to your feet having crossed the marathon finishing line, an official says to you: “Think you got it wrong, mate. This is not a marathon. It is a triathlon. There are still two stages to go”.

Now, don’t you wish you had put in those training hours.

Article 50, Brexit, British Government, Irish border, Northern Ireland, Theresa May

That #Brexit Winding Road may be a Cul-de-Sac

This post was written on Monday Dec 4th, 2017.

may-tusk-junckerThere was a time, before the Internet and social media, when politicians could say very different things to very different audiences and get away with it. Not so today. To coin a phrase, what you say in Brussels is known in Belfast before you finish your sentence.

As I write this, at 18:30 Paris time, reports of what actually happened in Brussels today are still somewhat unclear. But it does appear that all parties thought a deal was done until the UK said no at the last minute. Speaking to Irish radio, the Taoiseach (Irish Prime Minister), Leo Varadkar said:

“The U.K. had agreed a text on the border that met our concerns … I was then contacted by [Juncker and Tusk] and confirmed Ireland agreement to that text… I am surprised and disappointed that the U.K. Govt is not in a position to agree to what was approved today”

Reports suggest that the Democratic Unionist Party (DUP) said it could not support the agreed text as it appeared to split Northern Ireland economically from the rest of the UK as Northern Ireland would, to all extents and purposes, still be in the EU’s single market and customs union while the rest of the UK would not.

As UK Prime Minister, Theresa May, needs the DUP’s 10 votes in the House of Commons to keep her government in office, the “Ulster says No” stance of the DUP left her unable to tell the EU that the “UK says Yes” to the Article 50 deal that was on the table.

But even if the DUP had not blocked the deal, May’s ability to get what was agreed on citizens’ rights and the financial settlement through the Conservative Party would have been problematic, as we argued in our last post: https://beergbrexit.blog/2017/12/03/long-and-winding-brexit-road/.

That is still our view.

One thing is now clear. If the DUP blocked today’s deal then there are no circumstances in which the Irish government will in any way soften the position it has taken in the talks to date.

The UK prime minister may allow herself to be held hostage by the DUP. For an Irish government to do so would be political suicide. Further, before today the Irish government had the solid support of the other 26 EU member states. The UK’s behaviour today will have will convince them that they were right to be so supportive of the Irish.

Other EU member states will be asking themselves this evening just how reliable is the UK government as a negotiating partner? What, if anything, can the government deliver? How does the process now move forward with any credibility?

Because a key currency in negotiations is credibility.

When I tell you it is a done deal, it is a done deal. My word is my bond. When I break my word my credibility is shot. Why would the other side make me an offer if they can’t be sure I can deliver?

So, what happens now?

The UK government has put itself in a position where it cannot meet the expectations of all those involved in the Brexit process. Cut a deal with the EU on the terms offered by the EU and a significant part of the Conservative/Brexiter/DUP coalition will be outraged. Keep the coalition together and there will be no deal with the EU and the UK will exit the EU without any agreement as to future trading arrangements. Business will be outraged.

Choices have to be made within hours, days at the most. No more hiding behind language that could mean all things to all men… and women.

Brexit is a process built on negativity. Brexit is against things: …Against the European Court …Against the European Commission …Against European laws …Against immigration.

There is no coherent answer to what Brexit is for. A Global Britain, free trading with the world? A “drawbridge economy”, keeping jobs in and people out? Close to the EU without being part of it, or pushing the EU as far away as possible?

Since the UK voted to leave the EU the EU has known clearly and precisely what is wants. To preserve its internal legal order and the integrity of the single market. It has gone into the process with defined objectives.

On the other side, the UK has been trying to satisfy dissipate parts of a coalition which want incompatible things. But there are only so many impossible things you can believe before breakfast.

Since we started writing this briefing we have consistently said that business should hope for the best, plan for the worse. Increasingly, we think that business should just plan for the worse.

Article 50, Brexit, David Davis, GDPR, Irish border, Michel Barnier, Theresa May

Still a (very) Long and Winding #Brexit Road Ahead

This Briefing was written on 3rd Dec 2017

7EEC154E-1C26-4BA9-BD46-6E7E326308E2As we write this Briefing, early on Sunday Dec 3, it would appear that the EU and the UK are moving towards a position where the EU Council (heads of government) at its next meeting on December 14/15 will be able to declare “sufficient progress” in the Article 50 discussions to date to allow them to move on to the next stage, which will focus on the “framework” of the UK’s future relationship with the EU.

However, as one diplomat put it, until we see what has been agreed “on paper” rather than “in the papers” it is wise to withhold judgement. But it does seem that the logjam on citizens’ rights has been broken by the UK conceding an ongoing role for the Court of Justice of the European Union (CJEU) in upholding the rights of EU citizens resident in the UK after Brexit.

The UK has also agreed to meet all its outstanding financial obligations to the EU, estimated at around €50 billion net, while accepting that this money does not buy a future trade deal of any type, even if, for the moment, UK cabinet ministers are not exactly making that clear to MPs in the House of Commons.

What happens when the penny drops with Conservative MPs about the nature of the financial settlement and the ongoing role of the CJEU is anyone’s guess. For an honest assessment of the situation by an arch-Brexiter see here (behind a paywall). It is one thing to make promises across the negotiating table in Brussels. Delivering them as a minority government in Westminster is another, as this BBC report on the latest list of “red lines” drafter by Brexit hardliners makes clear.

The possibility of the reestablishment of a border in Ireland continues to be the most intractable of the three A50 issues. Effectively, the EU27 has made it clear that Ireland has a veto on “sufficient progress”, if it is not satisfied by commitments from the UK that there will be no border after Brexit. The president of the EU Council of Ministers, Donald Tusk, made that clear during a visit to Dublin on Friday, December 1 when he said:

“Let me say very clearly. If the UK offer is unacceptable for Ireland, it will also be unacceptable for the EU.”

For the complexities of the “Irish Question” see this excellent analysis by RTE’s Tony Connolly: here

However, let us assume that an answer is found to the “Irish Question” and the EU Council agrees that sufficient progress has been made to allow the discussions to proceed, what happens next?

Before discussing this question it is critical to keep in mind that, as matters stand, having served the Article 50 notice, the UK will leave the EU at midnight, Brussels time, on the 29th March 2019. At one minute to midnight the UK will still be an EU member. At one second after midnight it will no longer be a member. In EU terminology, it will be a “third country”, albeit one with an exit/transition deal, which we come back to later in this Briefing.

Once the UK is out of the EU after midnight on March 29th, 2019, there is no easy way back. The UK would have to apply to re-join. While accession could be fast-tracked it would be on different terms and conditions than the UK currently enjoys. No budget rebate, for example. Membership of the euro anyone?

As things stand, the only way the UK can avoid quitting the EU on March 29, 2019, would be for the House of Commons to vote to withdraw the A50 notice. Were that to happen, then legal and political signals from Brussels and European capitals suggest that the EU would agree to the withdrawal, through it is unlikely that the matter would be straightforward. The EU would surely not accept a situation where the UK was permanently sitting on an A50 notice which it could reactivate at any time. There would need to be certainty and finality that Brexit was over.

But let’s be clear. There is no evidence that any move to withdraw the A50 exit notice would win majority support in the House of Commons at this time. For business, the working assumption has got to be that the UK leaves the EU in March 2019. Everything else flows from that.

To move on. We noted above that there appears to be a mistaken belief on the part of many Conservative MPs that the offered €50 billion is conditional on a trade deal acceptable to the UK. A second mistaken belief on the part of MPs of all parties is that if the EU Council agrees to allow the discussions to move to phase 2 then talks will immediately open on the substance of a trade deal. That is not what will happen.

Article 50 of the EU Treaty states:

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.

The Article 50 talks will only focus on the “framework” for the future relationship between the EU and the UK, not on the substance of that relationship. Detailed negotiations on the substance of the relationship (trade deal) will only begin when the UK has become a third country, after March 29, 2019.

All that will be on the table during the A50 discussion is an outline of the type of trade deal that the EU will offer the UK in the future, after Brexit happens. As of today, the best that the UK can hope for is a trade deal along the lines that the EU has signed with Canada, which focuses mainly on trade in goods, with relatively little to say about services, which constitute about 80% of UK economic activity.

But the UK hopes for more than “Canada” and every day UK newspapers are full of statements and reports from UK trade groups arguing for a “special” deal for their sector which would leave things more or less as they are today, as if that sector continued to be still in the single market and the customs union.

This is not going to happen.

How do we know? Because the EU has said so. Everything the EU has said during the Brexit process so far has happened, even when UK ministers waved away such statements as “negotiating posturing”. As the Financial Times noted (here) developments to date have been nothing more than a series of “UK concessions” marking a “slow surrender to Brexit reality.”

As Charles Grant of the Centre for European Reform notes, UK negotiators:

…hope that the member-states most dependent on UK trade will push the Commission to offer the British a better deal than the Canadians, that is to say one with more on services. So far the EU shows few signs of softening. But if it did ever grant the UK anything close to single market membership in specific areas, it would demand cash payments, compliance with EU rules and ECJ rulings, and perhaps a liberal UK regime on migration. If all went smoothly, a generous offer from the UK on security and defence co-operation could encourage the EU to accept Canada Plus. (here).

Further, when it comes to going beyond “Canada” the EU will be mindful that any concessions it makes to the UK could be claimed by other countries, if such concessions were seen to breach WTO rules. Though, to be honest, the intricacies of international trade policies are beyond our competency and are fully understood only by the trade Illuminati.

So, the ”framework” that the EU will put on the table in 2018, during phase 2 of the A50 talks, will be a framework for a trade deal that comes nowhere near the trading arrangements on manufactured goods, agricultural products, fisheries and, most importantly, services that the UK has as a member of the EU.

The EU is also likely to offer the UK a strictly, time-limited transition deal, of probably about two years, during which the UK will be a de facto if not de jure member of the EU, with the UK accepting during the transition the EU’s four freedom of movement principles, of people, goods, services and capital, as well as being subject to the jurisdiction of the CJEU.

During the transition, additional payments, over and above the €50 billion, will fall due. During the transition nothing will change and trade in goods and services, including financial services, between the EU and the UK will continue as of today. However, the UK will no longer be able to nominate an EU Commissioner, elect members of the European Parliament, or have a judge on the European Court.

During the transition discussions will open on the substance of the future trade agreement between the EU and the UK. We use the word “discussions” rather than negotiations because, the brutal truth be told, these talks will not be negotiations as most of the readers of this briefing, seasoned labour relations practitioners, understand the meaning of that word. It will be damage limitation on the part of the UK because the UK has initiated a process which it knows will leave it worse off than it is today. No one “negotiates” to make themselves poorer. There may be times when you are forced into such a situation, but Brexit is the first known example of the losing party initiating the process.

Just how much can be achieved in two years is also open to question, conjuring up the possibility of a mutual decision by the parties to extend the transition period. “Strictly time-limited” may turn out to be a somewhat elastic concept, capable of being stretched and stretched.

It is also worth keeping in mind that a transition period does not make Brexit “harder” or “softer”. It just postpones it for a few years, however long those years turn out to be.

Whatever deals emerges from these subsequent trade talks which, to repeat, will only take place after the UK ceases to be a member of the EU in March 2019, will, more than likely, have to be ratified by national parliaments. That could well be a tough ask, especially if there is any suggestion that the UK would be free in the future to undercut EU social, environmental and other standards.

A country like Ireland may even consider that the deal would have to be ratified by referendum, to establish the “will of the people”. Funny thing this ¬“will of the people” stuff. Apparently it is not just limited to the UK and other people in other countries might have other “wills”.

The EU’s chief negotiator, Michael Barnier, has said that the A50 negotiations must conclude by around October 2018, to allow time for national governments to consider the proposed agreement and for ratification by the EU Parliament. So, as of October 2018, the UK House of Commons will know what is on offer:

1. The UK must meet all its existing financial obligations to the EU, approximately €50 billion net.
2. The UK will be offered a transition deal or around 2 years during which nothing much changes.
3. The UK will be required to make additional payments to the EU over and above the €50 billion during the transition.
4. All that will be on offer after the transition will be a Canada style deal on terms and conditions considerably inferior to those offered by EU membership, or even by membership of the single market and the customs union.
5. Whatever trade deal is eventually negotiated could be subject to ratification by national parliaments in all EU27 member states. In effect handing 27 vetoes to 27 national parliaments.

Confronted with this reality, in all its nakedness and stripped of political spin, will the House of Commons vote for it? The UK’s Secretary of State for Brexit has told the Commons that if MPs vote down any deal then the UK will simply leave the EU without a deal. But then Davis also told the Commons that any deal would only be done at a minute to midnight on March 29, 2019, leaving no time for a meaningful vote or any time to reconsider the Article 50 exit notice.

If the House of Commons knows what is on offer six months before March 2019 then there is a time for a rethink. Could there be a rethink? From now to October 2018 is a very long time in politics.

A lot could happen.

For example, the idea that there are trade deals aplenty to be done with other countries to compensate for the loss of EU trade, could take a knock, especially if political uncertainty in the US puts a UK/US deal on hold. A collapse of the existing NAFTA deal would underscore how difficult trade talks with the Trump administration can be.

There is a long and winding road ahead, making it difficult to see the final destination. Developments over the next two weeks will be critical.

Brexit, Data Protection, Data transfers, GDPR, Theresa May

Another Brick in a #Data Wall? #Brexit #EUDataP

This article was written on Nov 4th, 2017

GDPR readyUnder the BEERG law of unintended consequences; the unintended outworking of an action or event is often far more significant or impactful than the intended one. And so, while the UK media obsessed on sex scandals and a cabinet resignation, the Brexit process crawled along with the announcement of another round of EU/UK talks next week and a vote in parliament forcing the government to publish 58 sectoral studies on the economic impact of Brexit.

Meanwhile, the most important Brexit consequence of the week may turn out to be an obscure clause in the Second Schedule of the Data Protection Bill, (lines 39 – 45 on page 125) which is currently being examined line-by-line in the House of Lords.

In an article in politics.co.uk last Friday, November 3, Martha Spurrier director of Liberty, an organisation which campaigns for civil liberties and human rights in the UK, drew attention to a little noticed provision in the Bill, Schedule 2, Part 1, Section 4.1 – Immigration, which reads:

The listed GDPR provisions do not apply to personal data processed for any of the following purposes—
    (a) the maintenance of effective immigration control, or
    (b) the investigation or detection of activities that would undermine the maintenance          of effective immigration control,
to the extent that the application of those provisions would be likely to prejudice any of the matters mentioned in paragraphs (a) and (b).

While, as Spurrier notes, the intent of the Bill is as the government puts to “empower people to take control of their data” she says that “it will strip millions of their rights.”
As Spurrier writes, contrary to the stated intentions of the legislation, the real impact of Schedule 2.4 means that:

…any government agency processing data for immigration purposes will be free of those pesky data protection obligations we’ve developed through successive Acts of parliament – and signed up to through the EU’s General Data Protection

In practice, the exemption will create a two-tier data rights regime. When an agency relies on the exemption, individuals will lose their right to know what information is held about them, who is processing it and why.

They will not be able to correct or erase information held about them – which doesn’t bode well considering how much of the data held on us is out of date or just plain wrong.

She goes on to note that the lack of a definition of effective immigration control or activities that would interfere with it “makes it practically impossible to draw up a list of all those who could be caught up”. “The exemption could also be used to facilitate the sharing of personal data between public services and the Home Office if it’s decided checking everyone’s entitlement to access healthcare, education or social housing is necessary for effective immigration control.”

She concludes that the idea “that personal data collected for one purpose can’t be used for another without the individual’s informed consent is the cardinal principle of data protection. This exemption makes a mockery of it and sets a damaging precedent for the privacy rights of all of us.”

What has this got to do with Brexit?

Simply, it is one more potential barrier, and a significant one at that, to the free flow of personal data from the EU to the UK after Brexit.

That public authorities could have such unfettered rights to citizens’ personal data without citizens been aware of what data is being held, could make it extremely difficult for the European Commission to issue an “adequacy decision” on the UK’s data protection regime. Such a decision is vital if personal data is to flow freely from the EU to the UK, without individual businesses having to go through complex procedures to put in place binding corporate rules or avail of standard contractual clauses which are, in any event, been called into question by privacy campaigners as failing to offer sufficient protect for data transferred to the US.

But “data adequacy decisions” are not easy come by and can take years. Only a handful have ever been issued. See here for details.

The EU Parliament is also likely to have a good deal to say on the matter. And what it has to say will not be kind to the UK.

The data economy in the EU was estimated to be worth €272 billion in 2015, or around 2% of the EU-28 GDP. And that figure is expected to rise to €643 billion by 2020, according to the UK’s Department for Exiting the European Union. 43% of EU tech companies are based in the UK and 75% of the UK’s data transfers are with the EU Member States. Over 70 per cent of the UK’s trade in services is supported by personal data flows as the government noted in a position paper last August: “Data flows between the UK and the EU are crucial for our shared economic prosperity and for wider cooperation, including on law enforcement.”

The UK government believe that it is taking the necessary steps to ensure it is aligned with the requirements of EU regulations and to comply with European legislation, post-Brexit.

Further, to consolidate the relationship, it is proposing “a UK-EU model for exchanging and protecting personal data, […]providing sufficient stability for businesses, public authorities and individuals.” This would ‘build on the existing adequacy model’, and would see continued engagement of the UK Information Commissioner’s Office with other EU regulators. In other words, it wants the UK’s data commissioner to still have a seat at the table.

However, as we have previously noted in these BEERG Brexit Briefings, there is a major obstacle in the way of the EU issuing a “data adequacy decision” as regards the UK, post-Brexit. The Investigatory Powers Act, which came into force at the end of last year, allows the U.K. government to monitor large batches of data, collect people’s browsing records and hack citizens’ phones and computers for security purposes.

The Act was initiated by Prime Minister Theresa May when she was still at the Home Office. Critics, such as the German Green MEP, Jan Philipp Albrecht, have suggested that the Act gives the UK security services more far-reaching powers that the US counterparts. It was concerns over the extent of the access by the US security services to the personal data of EU citizens which had been transferred to the US that led to the collapse of the old Safe Harbour Agreement, and its replacement by the Privacy Shield arrangement.

EU law provides for exemptions from general data protection principles in matters of:
•  national security and defence;
•  the prevention, investigation, detection and prosecution of criminal offences;
•  the protection of data subjects and the rights and freedom of others.

But these exemptions only apply to EU and EEA member states. They do not apply to “third countries”, EU terminology for countries that are completely outside the EU/EEA framework. After Brexit, as it has been defined by the UK government, the UK will be a such a “third country”, and so the security exemption will no longer apply. The problems created by the Investigatory Powers Act is securing an “adequacy decision” from the EU will be further exacerbated by Schedule 2.4, as discussed above.

There will be many in the UK who will argue that, even in the absence of an overarching Brexit agreement, the EU will cut “mini-deals” with the UK, including one on data flows. But then again, maybe not. As Sir Ivor Richards said in his comment to a House of Commons committee a week back:

What is going to happen? In the absence of a deal, have the French, Belgians or Dutch any incentive to sort that problem (customs blockages), or do they have an incentive to keep us stewing? In the area of data protection, do they have an incentive ultimately to cobble together some agreement at the last minute in order to keep data flows, or do they have an incentive to maximise the flow of UK business that has to shift to the continent?

The Investigatory Powers Act is already on the statute books. Schedule 2.4 of the Data Protection Bill is not.

Spurrier makes her own arguments as to why the provision should be opposed.

We simply seek to draw attention to the fact that it places another enormous brick in the wall as regards future data flows between the EU and the UK when Brexit bites.

 

 

Article 50, Brexit, British Government, Negotiating, Theresa May

#Brexit, a Dickensian example of: “Please sir, can I have less?”

This article was written on Oct 29, 2017.

Sir-Ivan-Rogers-776583If the absence of economic rationality, as a driving force behind Brexit, was ever in question, comments this week from three very different speakers should put an end to the doubt.

First, the French ambassador to the US, Gerard Araud tweeted:

“Maybe I am too cartesian but leaving the largest free trade area in the world and 53 free trade agreements on behalf of free trade is weird.”

Indeed, much too logic. But that’s the French for you.

Second, Michael Bloomberg, the billionaire founder of Bloomberg and former mayor of New York commented:

Brexit is the “single stupidest thing any country has ever done…it is really hard to understand why a country that was doing so well wanted to ruin it”

Third, and most significantly, speaking to a House of Commons committee, Sir Ivan Rogers, the former UK ambassador to the EU (Photo above with David Cameron), who resigned earlier this year after warning against “ill- founded arguments and muddled thinking” in the UK’s approach to leaving the EU, said:

You cannot know how long a free trade deal discussion will last until you get into it. I have lived through a number of them, including the Canadian one, which we all thought was relatively straightforward, which we kicked off in about 2009, and it still is not in force; and they are one of the more simple partners. You cannot know until you get there. There are things that are simpler with us than with Canada simply because we have been in the organisation. There are things that are more difficult because we are a diverging partner rather than a converging partner.

All trade deals in history are struck between people that are trying to get closer together. This is the first trade deal in history struck between partners who are trying to get further apart. There are some things that are simpler because they know us better and we have been part of their organisation and, by definition, there is a huge degree of regulatory convergence and they know our regulation but we are obviously going to diverge to some extent, and the question that is politically live, including in this House, will be how far we diverge. (Our underlining).

I would take issue with Sir Ivan’s comment that the two sides are trying to get “further apart”. It is just the one side, the UK, that wants to make the break. But apart for that, what he says is right.

Normally, the parties to a trade deal believe the conclusion of the deal will be win-win for all, making them better off than they are now, boosting trade between the parties, enhancing business opportunities rather than limiting them. Getting closer together rather than “trying to get further apart”.

But in deciding to leave the EU, the single market and the customs union the UK will not be better off than it is now. As Sir Ivan said earlier in his remarks to the committee:

… from other capitals often it is read as meaning the Brits would rather like the benefits of three of the freedoms whilst suspending or ending the fourth freedom. The Brits would rather like to have continued, largely unchanged, market access in all the areas that they want, and see no reason why that market access should be diminished…
But if that is what the “Brits” would like, they are not going to get it, Sir Ivan continued:

… The Brits need to understand that there will be a radical difference as a consequence of exiting, in terms of levels of market access in multiple sectors that they care about.

… The British cannot simply expect the world to carry on broadly as is. They cannot suspend free movement of people because that is no longer applicable to them, live outside the jurisdiction of the Court of Justice, but still have everything that they liked about the levels of market access when they were inside the venture.

Given his long experience of the EU, Sir Ivan knows what he is talking about, which is probably a lot more than can be said for many members of the government and many leading Brexiteers.

If Britain cannot expect to have as good terms outside the EU as inside, how does it go about negotiate a lesser deal than the one it has now? The answer, in all probability, is that it can’t. How can the UK government turn around to the motor industry, the pharmaceutical industry, the food industry or the chemical industry and tell them that the agreement it has just negotiated with the EU will put more obstacles in their way when exporting to the EU? More paperwork will be required, more customs checks, longer waiting times at borders will all be part of the new deal.

Read Sir Ivan’s remarks, quoted above, closely. Better still, read the full script of his testimony to the House of Commons committee, which can be found here.

While diplomatically couched, he is saying that if you think the Article 50 negotiations on the financial settlement, citizens’ rights and Ireland are difficult, wait until you actually get to the trade talks. They will be brutal and bloody. Because, as we noted in last week’s blog, what the “Brits” want is to move from a marriage to a “friends with benefits” arrangement and there are no circumstances in which the “jilted” EU will agree to such an arrangement, where the UK gets all the benefits it wants but incurs none of the costs.

Further, Sir Ivan, along with his two fellow panellists, clearly makes the point that the UK government is deluding itself if it thinks that a DCFTA, a “deep and comprehensive free trade agreement” in the Brussels jargon, will be agreed before March 2019, to be followed by a two-year transition period, or “implementation phase” as UK Prime Minister, Theresa May, insists on calling it.

At best there will be an agreement, as part of the Article 50 process, to negotiate a DCFTA during the transition period, by which time the UK will have left the EU. All the transition period does it to buy two more years before Brexit bites.

It is not “hard” Brexit or “soft” Brexit. It is just slow Brexit. Because it will be impossible to negotiate such a DCFTA within the two-year transition. At the end of the two-year transition the UK may still find itself without a trade agreement with the EU.

The UK has gotten itself into an impossible negotiation. The structure and the timetable of the negotiations, which they agreed to, plays against them. The clock ticks remorselessly down. The negotiations open with the UK having all it wants; free and frictionless trade with the rest of the EU. But the price of that trade is the free movement of people, a price the UK no longer wants to pay. If it won’t pay the price, it can’t have trade on frictionless terms. What does it give up as the price of ending free movement?

How do you ask for less in a negotiation?

Those of you of a certain age will well remember the scene from the movie Oliver in which Oliver, approaches the top table in the workhouse and, holding out his bowl, says “I want some more”, to the outrage of Mr. Bumble, who runs the workhouse. Theresa May and David Davis are now both holding out the UK’s bowl to Juncker, Barnier and Tusk and the EU 27 and saying: “We want a lot less than we now have”.

Just how do you negotiate that?

Article 50, Brexit, Divorce, Negotiating, Theresa May

On #Brexit: You can’t always get what you want…

This BEERG Brexit Briefing (#16) was written on Sat Oct 21, 2017

Hammond BoJoWords and phrases can shape reality.

How we describe an issue or event can determines how that issue or event is to be understood. Such “framing” can be particularly important when we are dealing with some something unique, something that has never happened before. How do you describe the unknown? How do you explain the unprecedented?

One way of doing so is to compare the unknown to something known and familiar. This, in the UK at any rate, is what many journalists, commentators and academics have done when writing about Brexit, an unprecedented and unknown event. They have taken to describing the Article 50 discussions between the EU and the UK as being akin to divorce proceedings, with the key argument being about money: how much will the UK have to pay the EU as part of the “divorce settlement”?

The divorce comparison makes writing about Brexit easy because divorce is something we are all too familiar with and our culture is replete with movies, plays and songs describing the hurt and bitterness that divorce and the ending of relationships can cause.
But in the case of Brexit the divorce comparison is not only wrong, it is also completely misleading.

In a divorce, the two parties are bringing a relationship to an end. Depending on the context, the discussions may be amicable or poisoned. The couple may end the relationship without rancour or they may end up hating one another. But, one way or another, the relationship ends and both move on with their now separate lives. Yes, they may need to see one another from time to time, especially if the welfare of children is involved, but in general, after the divorce is finalised, they live independent lives. Maybe find new partners, create new families.

This is where the divorce analogy, when used to describe Brexit, breaks down. Because Brexit is not a divorce. The UK does not want to “divorce” the EU in the sense that it no longer wants to have anything to do with it.

What the UK wants is to end the 40-year marriage it has with the EU, and with it all the obligation and responsibilities that marriage brings. But, at the same time, it wants to continue to have a “live-in” relationship with the EU, a new “open relationship” that will allow the UK to continue to have the marital benefits it now has, but still be able to see other people from time to time.

The UK wants to move from being married to the EU to being a “friend with benefits”. Does not the phrase “we are leaving the EU but we are not leaving Europe” mean exactly that? “I am ending the marriage but I am not leaving you.”

Which is why the talks between the EU and the UK are so slow and difficult. Imagine that your partner of more than 40 years tells you one day that they want to end the marriage but at the same time they want to continue to live in the house with you, share the same bedroom with you but they no longer want you to have any say in their life as they are “taking back control”. And, at the same time, they want to be free to have relationships with other people.

Faced with such a statement from your partner who, yes, has always been a bit difficult to live with but whom you have grown to love anyway, to say that you would feel hurt and rejected would be an understatement.

You would be outraged and incensed, especially when it came back to you that your partner was going around the neighbourhood bad-mouthing you. (There are some in the UK who appear to believe that the White Cliffs of Dover somehow or other block all that is published or broadcast in the UK from crossing the channel to Europe).

Then, to further complicate an already fraught situation, they send you a letter saying that they are ending the relationship on a particular date and that they want, no… they are demanding… that the new arrangements are in place by that date. You never wanted the marriage to end in the first place, rocky though it was at times. Actually, if they saw sense you would be prepared to take them back, but some things would have to change.

But, with sadness, you accept that they have made the decision they have made and you tell them that if they want to end the marriage you need an agreement on the shared commitments you had entered into together. They agree to such discussions but then they keep saying that what they really want to talk about is the “future relationship” they want with you. They keep saying that they want a “deep and meaningful” relationship that looks pretty much like what they have now but shorn of all responsibilities and obligations.

Every time you say that you can only talk about the future when the present is sorted out they reply that the present is dependent on the future. “If you give me a future deal I like, friends with benefits, I’ll meet my current obligations”.

But you are never going to give them the future deal they want. They will no longer be able to come and go without hindrance or have free access to the house. You may be prepared to rent them a room but the idea that you will continue to share a bedroom is not something that you are prepared to entertain. Friends, yes. Friends with benefits, definitely no. If you do rent them a room it will be on strict terms and conditions, involving a rent appropriate to the benefits to be provided.

The problem is that they know this in their heart of hearts. Rationally, you can’t because it would mean that they got all the benefits while you took all the costs.

While a negotiation between two people along the above lines would be difficult in any event, you can multiply that difficulty exponentially when you have 29 parties on one side of the table (27 EU member states, the EU Commission and the EU Parliament) and, on the other, a government which can’t even agree among itself if today is Saturday. If Philip Hammond said that today was Saturday, Boris Johnson would criticise him for stating the obvious instead of rejoicing that the sunny uplands of Sunday were fast approaching.

Negotiations between two parties only end in a beneficial outcome if both parties see that such an outcome is in their mutual interest. When one party sets itself an impossible objective then a deal is never doable. The UK wants to have better terms and conditions with the EU from outside the EU than it had inside the EU. Why would it be in the EU’s interest to agree to that? It is just not going to happen. You can go from being a friend with benefits to being married. It just does not work the other way around.

As I write this BEERG Brexit Briefing on Sat, Oct 21, the UK newspapers are full of talk that the EU is preparing to cut the UK a deal because EU leaders feel sorry for the UK Prime Minister, Theresa May.

Utter nonsense.

The EU is not going to pull a weak and worried Tory prime minister out of a political hole she has largely dug for herself. The EU will do what is in the EU’s interests. That’s what you call “taking back control”.

As for the UK? The Rolling Stones put it well: You can’t always get what you want…

 

Brexit, Negotiating, Theresa May, UK Labour Party

“Plan for the Worst: Hope for the Best” – the Fading Hope of #Brexit Deal

Posted on Friday, Oct 6th 2017:

4221396001_5597581765001_5597568337001-vsThe major party conferences have come and gone and still we are no wiser as to how Brexit is going to unfold. As we noted in last week’s Briefing, the Labour Party’s policy appears to be that they will deliver Brexit, but a Labour Brexit, not a Tory Brexit, whatever that means. Brexit is Brexit and Brexit means being outside the European Union (EU), the single market and the customs union.

However, Labour is in opposition and, so, for the moment what it says is important but nowhere near as important as what the Conservative government says, as it is charged with negotiating the Brexit arrangements with the EU. Whether it can get whatever deal it negotiates, if any, through Parliament, especially the House of Lords, is another matter.

This week’s Conservative Party conference was dominated by three issues: Brexit; who is going to succeed Theresa May as Conservative leader, and when; and Labour leader, Jeremy Corbyn. While Labour lost the last general election, it did not seem that way at last week’s Labour conference which had all the hallmarks of a victory rally crossed with a gathering of the devotees of the cult of “Jeremy”. Speaker after speaker proclaimed that Labour was no longer a “party in opposition” but a government in waiting”. What the difference between a “party in opposition” and a “government in waiting is” is difficult to discern because in either configuration you are in opposition.

But what has really spooked the Conservatives about Labour and the “cult of Jeremy” is that Labour appears to have captured the vote of the under 40s. Over 60% of the under 40s voted for Labour at the last election. The average age of Conservative Party members is 71. Go figure.

Corbyn is a complete 1970/80s throwback socialist, who believes in a managed economy, managed by the state that is, who is proposing an extensive program of renationalisation, a policy of tax, borrow and spend, and a greatly enhanced, legally underpinned role for trade unions, despite their absence of members. He is also an admirer of the late Hugo Chavez of Venezuela and leftist groups worldwide in general.

This week, speaker after speaker at the Conservative conference bemoaned how bad the “socialist seventies” had been in the UK and what an economic basket case Venezuela was. Both true. The only problem for the Conservatives is that no one under 40s remembers the 70s so it sends no shivers down their spine and, quite frankly, most British people probably do not know where Venezuela is, much less care about it. In their hearts the Conservatives know this which is why they are terrified of an election, which polls suggest would see Corbyn enter 10 Downing Street.

Which is probably the only reason Theresa May is still prime minister. A year ago, she was the political empress of all she surveyed, even if she was an accidental prime minister, there because all her opponents garrotted one another in the leadership election called when Cameron resigned. She told the 2016 Conservative conference that she would deliver the hardest of hard Brexits, out of the EU, the single market, the customs union and the jurisdiction of the Court of Justice of the European Union (CJEU).

Conference went wild when she said she planned to deliver the Article 50 letter to the EU by the end of March 2017 announcing the UK’s departure, which meant that the UK would leave the EU by the end of March 2019. Never mind that no work had been done as to what leaving the EU would actually mean in practice. She told the crowd what they wanted to hear.

Early 2017 she was riding high in the polls. 20 percentage points ahead of Labour. April she went for a walking holiday in the Welsh hills. No one knows what happened during that holiday. Did she have a vision? Did the spirit whisper in her ear? When she returned she called a general election for June, so as to boost her parliamentary majority. A presidential style campaign built around a “strong and stable” Theresa May backfired disastrously, the Conservatives lost their majority, and only continue in government with the support of the Ulster-based Democratic Unionist Party (DUP). A weak and wounded prime minister, heading a deeply divided government, split over how Brexit should be delivered, charged with the most complicated negotiation any UK government has ever faced in peacetime.

Only the fact that there is no obvious successor in the House of Commons and a Conservative leadership election would now be another time-wasting distraction from the pressing matter of Brexit, while an early general election could see Labour in government, has kept her in place.

As I write, on Friday morning, the newspapers are full of talk about plots to dispose of May following her disastrous conference performance last Wednesday. Napoleon used to say “I know he is a good general, but is he lucky”. Whether she is a good general or not and the answer is, probably not, she is certainly unlucky, losing her voice during her conference address, with a comedian running on stage to hand her a dismissal notice, and, to top it all, letters falling out of the conference logo on the wall behind her.

And all the while she struggles to define what Brexit means and how it should be delivered. A few lines in her conference speech about Brexit that said nothing new. Yet, from Sunday to Wednesday, speaker after speaker at fringe events around the conference, called for the hardest of hard Brexits, with Boris Johnson, the foreign secretary kicking things off in a newspaper interview as the conference began saying that any transition arrangements should not last a second more than two years, that the UK should not implement any new EU rules during the transition and ruling out payments to the EU in the context of any future commercial relationship with the EU.

Taking what Johnson said, along with other comments by senior politicians, the Conservative appear to want a “double bubble, hokey cokey, cake and eat it” deal with the EU.

“Double bubble”, we have noted before, is an attempt to use the money that the UK owes the EU as a result of commitments it signed up to as an EU member to buy a transition deal and future trading relationships. In a word, using the same money twice. This is not a “generous offer” the EU will accept. “Agree to paying what you owe us, and then we’ll talk about the future”, has been the EU’s position from the get-go. It will not change now.

“Hokey cokey” sums up what Mrs. May said in a TV interview last Sunday. She told the interviewer that during the transition some sectors could drop out of the EU’s legal framework quicker than others. In other words, some parts of the UK economy would be “in”, while some parts could be “out”. She didn’t explain how, for example, if you had two factories cheek-by jowl, both manufacturing different products, one might be subject to EU law and the other not. In the economy as a whole, how do you draw lines between different sectors? For example, is a car a piece of metal or a bundle of software? Simply to state that you could have two different sets of laws governing a modern, integrated economy at the same time is to realise how impossible such a notion is. The EU’s position, again, is unwavering. All EU laws apply to all sectors for the total duration of any transition.

“Cake and eat it” is to ask for seamless, frictionless trade between the UK and the EU though a customs arrangement for the transition period, while the UK, at the same time, is free to negotiate and sign trade agreements with other countries. Again, the EU will not accept this. But it is a pipedream in any event. Last week’s the US’s decision to impose a 219% tariff on Bombardier should have brought home – to even the most starry-eyed Brexiteer – that when President Trump talked about signing a “beautiful” trade deal with the UK he mean “beautiful” for the US, with the UK being skinned alive. If Bombardier did not fully deliver the message then the decision by the US and others this week to object to a EU/UK arrangement to divide EU World Trade Organization (WTO) quotas between the two should have. A constant refrain of the Brexiteers has been that, absence a deal with the EU, they can revert to trading with the EU on WTO terms. Simpler said than done it would appear.

Next week sees another round of negotiations between the UK and the EU over the Article 50 exit agreement. As ever, a financial settlement, citizens’ rights and matters relating to Ireland are the three issues that have to be dealt with. Press reports this morning suggest that the UK will refuse to discuss financial issues, other than in the context of transition and future trade arrangements. Double bubble it is. Expect the talks to go nowhere.

Given the political chaos in the Conservative Party and in the government, it is becoming increasingly difficult to see how the UK government can walk back from the positions it has taken in the negotiations with the EU. Even if it could, why would the EU make any deal with a bitterly divided UK government, when it knows that there is less than a 50% chance of that deal being ratified?

This week Germany’s leading employers’ organisation advised its members to prepare for the “hardest of hard Brexits”.

This chimes with our own long-standing advice: “plan for the worst; hope for the best”.

But, the hope is rapidly draining away.