

Brexit: the Brexit dividend 27/07/2016

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Full immersion in the Brexit issue for the month since the referendum has not delivered anything like the euphoria that one might have expected. After all, the success of the "leave" proposition has not yet secured our exit from the EU and, Mrs May's assurances aside, until we are actually out, we are not in a position to count our chickens.

However, aided and abetted by the Express and others, there are those who are being rather precious about what constitutes leaving the EU, suggesting that continued membership of the EEA via the Efta – or "Brexit-lite" as it is sometimes called – is tantamount to staying within the EU.



Nothing, of course, could be further from the truth. Norway, Iceland and Liechtenstein are all fully paid-up members of the EEA Agreement yet, not by any measure, could they be considered to be part of the EU.



Nevertheless, we do understand the reservations about remaining in the EEA – although it is not always clear that people fully understand that we are already members. As a destination, or end point, the EEA is not optimal, although it has distinct advantages over full EU membership. We would have broken free from the drive to political integration and the jurisdiction of the ECJ, while staying in the Single Market.



As to freedom of movement, we have no doubts whatsoever that the Article 112 "safeguard measures" provide a mechanism which will enable us to resolve the issue of unrestricted immigration from EU Member States, at least for the short- to medium-term, creating space to engineer a lasting solution.



What then becomes essential though is that we define the end game. There is absolutely no point in bleating about the EEA being an "interim option", if the end game is defined in facile terms, such as a "free trade area". That cannot in any way compete with participation in the EEA/Single Market which is, after all, the largest and most comprehensive free trade agreement in the world – and certainly one of the most dynamic.



This is why, in Flexcit, we have gone to such trouble in phases three and five to set out the European alternative, and then the global dimensions which constitute the structures which are capable of delivering the Brexit dividend.



The problem we have is that the media and many of the pundits, having done little thinking over the last few years, are now focused on the immediate exit strategy, without in any way understanding that the Brexit opportunity lies not in the mechanics of securing an exit, but in the use we make of the freedom so gained.



Reviewing the elements of the Brexit dividend, the first and almost immediate gain is the ability to resume full participation in the global bodies of which we are members, casting our votes on our own behalf instead of being required to support the EU's "common position".



But what is not fully (or at all) appreciated is that, through the developments in globalisation – and in particular to TBT/SPS Agreements and the Vienna and Dresden agreements, we recover one of the most important legislative attributes which we have currently ceded to the European Commission – the right of initiative.



What in many ways makes EU membership so objectionable is precisely this right of initiative – the monopoly power to propose new laws and, because to repeal or remove a law requires a new law, the power to protect the acquis from dismantling.



Freed from the tyranny of right of initiative, the UK in concert with other states, can define the rule book at the global level and continental level. A remarkable example of this is the UNECE WP.6 Working Party on Regulatory Cooperation and Standardisation Policies.



Through this we have seen the development of the "International Model" of regulation, using the mechanisms of the Common Regulatory Objective (CRO) which achieves in a steady, unspectacular way the degree of regulatory convergence that agreements such as CETA and TTIP aim to achieve but somehow never actually deliver.



Then, through the TBT/SPS, etc., Agreements, the participating states are able to require the Commission to redefine the Single Market acquis, setting the rules for the market that the Commission must implement in preference to its own.



Over term, we have the ability completely to reshape the EU's Single Market, acquiring considerably more influence outside the EU than we have within it. The result will be the Holy Grail of European politics, an intergovernmental trading agreement created and managed by a community of equals.



But another huge element of the Brexit dividend is the ability to break away from the claustrophobic grip of the bilateral deals and the "big bang" regional trade agreements (the RTAs) which are actually holding back the expansion of global trade.



Instead, we can kick-start multilateralism and, in particular, concentrate on brokering narrowly-focused sectoral and product agreements which are easier and quicker to negotiate and yield more immediate cash benefits.



Then there is the issue of trade facilitation – the object of sneers from the trade deal "professionals" – which has the potential to deliver trillion-dollar annual dividends which relegate the modest gains from the likes of TTIP to the margins.



This, then, points to the way we should be framing Brexit – not as a sterile, mechanical process of extracting ourselves from the EU, but as a huge opportunity to redefine our position in Europe and the world. The key phrase is "Brexit dividend", the positive result of leaving and the reason we have worked so hard to achieve it. However, aided and abetted by theand others, there are those who are being rather precious about what constitutes leaving the EU, suggesting that continued membership of the EEA via the Efta – or "Brexit-lite" as it is sometimes called – is tantamount to staying within the EU.Nothing, of course, could be further from the truth. Norway, Iceland and Liechtenstein are all fully paid-up members of the EEA Agreement yet, not by any measure, could they be considered to be part of the EU.Nevertheless, we do understand the reservations about remaining in the EEA – although it is not always clear that people fully understand that we are already members. As a destination, or end point, the EEA is not optimal, although it has distinct advantages over full EU membership. We would have broken free from the drive to political integration and the jurisdiction of the ECJ, while staying in the Single Market.As to freedom of movement, we have no doubts whatsoever that the Article 112 "safeguard measures" provide a mechanism which will enable us to resolve the issue of unrestricted immigration from EU Member States, at least for the short- to medium-term, creating space to engineer a lasting solution.What then becomes essential though is that we define the end game. There is absolutely no point in bleating about the EEA being an "interim option", if the end game is defined in facile terms, such as a "free trade area". That cannot in any way compete with participation in the EEA/Single Market which is, after all, the largest and most comprehensive free trade agreement in the world – and certainly one of the most dynamic.This is why, in Flexcit, we have gone to such trouble in phases three and five to set out the European alternative, and then the global dimensions which constitute the structures which are capable of delivering the Brexit dividend.The problem we have is that the media and many of the pundits, having done little thinking over the last few years, are now focused on the immediate exit strategy, without in any way understanding that the Brexit opportunity lies not in the mechanics of securing an exit, but in the use we make of the freedom so gained.Reviewing the elements of the Brexit dividend, the first and almost immediate gain is the ability to resume full participation in the global bodies of which we are members, casting our votes on our own behalf instead of being required to support the EU's "common position".But what is not fully (or at all) appreciated is that, through the developments in globalisation – and in particular to TBT/SPS Agreements and the Vienna and Dresden agreements, we recover one of the most important legislative attributes which we have currently ceded to the European Commission – the right of initiative.What in many ways makes EU membership so objectionable is precisely this right of initiative – the monopoly power to propose new laws and, because to repeal or remove a law requires a new law, the power to protect thefrom dismantling.Freed from the tyranny of right of initiative, the UK in concert with other states, can define the rule book at the global level and continental level. A remarkable example of this is the UNECE WP.6 Working Party on Regulatory Cooperation and Standardisation Policies.Through this we have seen the development of the "International Model" of regulation, using the mechanisms of the Common Regulatory Objective (CRO) which achieves in a steady, unspectacular way the degree of regulatory convergence that agreements such as CETA and TTIP aim to achieve but somehow never actually deliver.Then, through the TBT/SPS, etc., Agreements, the participating states are able to require the Commission to redefine the Single Market, setting the rules for the market that the Commission must implement in preference to its own.Over term, we have the ability completely to reshape the EU's Single Market, acquiring considerably more influence outside the EU than we have within it. The result will be the Holy Grail of European politics, an intergovernmental trading agreement created and managed by a community of equals.But another huge element of the Brexit dividend is the ability to break away from the claustrophobic grip of the bilateral deals and the "big bang" regional trade agreements (the RTAs) which are actually holding back the expansion of global trade.Instead, we can kick-start multilateralism and, in particular, concentrate on brokering narrowly-focused sectoral and product agreements which are easier and quicker to negotiate and yield more immediate cash benefits.Then there is the issue of trade facilitation – the object of sneers from the trade deal "professionals" – which has the potential to deliver trillion-dollar annual dividends which relegate the modest gains from the likes of TTIP to the margins.This, then, points to the way we should be framing Brexit – not as a sterile, mechanical process of extracting ourselves from the EU, but as a huge opportunity to redefine our position in Europe and the world. The key phrase is "Brexit dividend", the positive result of leaving and the reason we have worked so hard to achieve it.





