

Brexit: a crisis of competence 01/12/2016

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Recently, and many times on his blog, Pete has been writing of what amounts to a crisis of competence amongst MPs.

Although there has to have been a time when they weren't wall-to-wall drooling imbeciles, in his



One MP (or many) determined to demonstrate that this is the case is Peter Lilley who, last Sunday had published in Although there has to have been a time when they weren't wall-to-wall drooling imbeciles, in his latest piece , Pete surmises that – possibly as a consequence of having handed over so many functions of government to the EU – our representatives no longer have the mental capacity to perform their functions.One MP (or many) determined to demonstrate that this is the case is Peter Lilley who, last Sunday had published in The Sunday Times a piece on how we should leave the EU.

… simply announce that we will continue to give EU imports tariff-free access - unless it chooses to impose WTO tariffs on us, in which case we will reciprocate. The onus would then be on the EU 27 to continue free trade or take the blame for triggering tariffs on their exports to their biggest market. Continental governments threatening this would face the wrath of German car makers and unions, French wine growers, Dutch horticulturalists and so on for initiating an unnecessary tariff battle in which they lose more than we do. The stupidity of this – for a man who is reckoned to be one of our brighter MPs – is beyond measure. If we leave the EU without a trade settlement, we will afford ourselves the status of a "third country" in relation to the EU.



This means that we place ourselves outside the tariff wall, whence goods exported to the EU Member States will automatically attract the prevailing duties. This is not something the EU does. It is something we will do by virtue of turning ourselves into a third country.



Furthermore, under WTO rules, the EU must levy MFN rates on all third countries without discrimination. If it gave preferential access to the UK outside the framework of a formal trade agreement, it would have to concede the same to all other third countries. This, it would be unlikely to do, as it would damage its trade policy.



On the other hand, if the UK opens up its markets, tariff-free, to the EU – outside the framework of a trade deal – under WTO rules, it must remove tariffs completely for all other countries – thereby removing any incentive any country might have to sign a free trade deal with us.



The point about all these matters, though is that we've explained them many times – not least in our Monograph series, which Mr Lilley claims to have read. It is not something special or made up. This is basic WTO law. But Mr Lilley



What is particularly tiresome about such people is that they all tend to adopt the same polemical strategy. For instance, when



Never mind that this agreement was 113 pages long, including schedules. The substantive treaty was six pages. It was a very basic treaty, dealing with a very limited range of products, concerning tariff reductions. And never mind that the treaty was replaced in 1994 by the EEA Agreement – which took from 1984 to 1992 to agree.



Thus we have Lilley argue that the government's claim that the process would take 10 years should be consigned to history. The two years laid down in article 50 is a maximum. It need not take that long, he writes.



He goes on to tell us that negotiating to join the European Economic Community took barely two years. That was far more complex than leaving: we had to introduce VAT, implement existing European law, replace Commonwealth preference and much else. Furthermore, he adds, the North American Free Trade Agreement (NAFTA) took only 14 months to negotiate.



The thing is, it doesn't actually take very much to show how dishonest this strain of argument is. For instance, the UK accession negotiations were carried out in two tranches, 1961-63 and then 1970-72. Much of the ground-breaking work was completed in the 1961-63 period, dusted off and carried over.



In between, as we now know, President Pompidou had decided as early as the Hague Summit in 1969, long before the second phase of the negotiations had begun, that Britain's accession could no longer be resisted by France. Thus, when the second phase began, it was already pre-ordained that they would succeed.



Not only is this hardly the case with the Brexit negotiations, we also know of the '70-72 period that our chief negotiator Con O'Neil famously took the line "swallow the lot, swallow it now", as the approach to the negotiations, in order to expedite proceedings.



As for VAT, this was introduced in the 1971 Budget by Anthony Barber. It did not impinge upon the negotiations. We were then negotiating a treaty which, with all the protocols and additions eventually came to 200 pages. By contrast, the current



As to NAFTA taking "only 14 months to negotiate", this is misleading. Such agreements do not come out of the blue – there is always a lead-up to them, which is an essential part of the process.



In



The Act led directly to negotiations with Canadian Prime Minister Mulroney, culminating in the Canada-US Free Trade Agreement, signed in 1988. Meanwhile, Mexican President Salinas and President Bush began negotiations for a trade agreement between the two countries. Into this, the Canadian agreement was folded, making it a trilateral agreement which then became NAFTA.



NAFTA was finally signed into law by President Bill Clinton on 8 December 1993, effectively taking nine years for the entire process to come to fruition.



Part of the game-playing by people such as Lilley, though, is to make the Article 50 negotiations appear much less problematic than they actually are, and this is one of the techniques.



Another technique is the "straw man", misrepresenting the nature of the options available. Thus, according to Lilley, "three options" have already been ruled out by government: remaining in the single market; remaining in the EEA like Norway or staying in the customs union. Never mind that the EEA option is an EU-free Single Market option. He doesn't want you to know that. His conclusion was that "our main objective should be a speedy conclusion", to which effect his idea for Brexit was straight out of the Redwood school. Aiming to bring the issue to a head before the French, German and Dutch elections, we should, Lilley wrote:The stupidity of this – for a man who is reckoned to be one of our brighter MPs – is beyond measure. If we leave the EU without a trade settlement, we will afford ourselves the status of a "third country" in relation to the EU.This means that we place ourselves outside the tariff wall, whence goods exported to the EU Member States will automatically attract the prevailing duties. This is not something the EU does. It is somethingwill do by virtue of turning ourselves into a third country.Furthermore, under WTO rules, the EU must levy MFN rates on all third countries without discrimination. If it gave preferential access to the UK outside the framework of a formal trade agreement, it would have to concede the same to all other third countries. This, it would be unlikely to do, as it would damage its trade policy.On the other hand, if the UK opens up its markets, tariff-free, to the EU – outside the framework of a trade deal – under WTO rules, it must remove tariffs completely for all other countries – thereby removing any incentive any country might have to sign a free trade deal with us.The point about all these matters, though is that we've explained them many times – not least in our Monograph series, which Mr Lilley claims to have read. It is not something special or made up. This is basic WTO law. But Mr Lilley thinks he knows better . And he has no need of evidence. As one of the chosen ones, he evidently feels he has a right to make wild assertions and be believed.What is particularly tiresome about such people is that they all tend to adopt the same polemical strategy. For instance, when John Mills was confronted with the prospect of negotiations taking a long time, he argued that, after Norway rejected EU membership in 1972, the Norwegians negotiated a trade deal with the EU in just under eight months.Never mind that this agreement was 113 pages long, including schedules. The substantive treaty was six pages. It was a very basic treaty, dealing with a very limited range of products, concerning tariff reductions. And never mind that the treaty was replaced in 1994 by the EEA Agreement – which took from 1984 to 1992 to agree.Thus we have Lilley argue that the government's claim that the process would take 10 years should be consigned to history. The two years laid down in article 50 is a maximum. It need not take that long, he writes.He goes on to tell us that negotiating to join the European Economic Community took barely two years. That was far more complex than leaving: we had to introduce VAT, implement existing European law, replace Commonwealth preference and much else. Furthermore, he adds, the North American Free Trade Agreement (NAFTA) took only 14 months to negotiate.The thing is, it doesn't actually take very much to show how dishonest this strain of argument is. For instance, the UK accession negotiations were carried out in two tranches, 1961-63 and then 1970-72. Much of the ground-breaking work was completed in the 1961-63 period, dusted off and carried over.In between, as we now know, President Pompidou had decided as early as the Hague Summit in 1969, long before the second phase of the negotiations had begun, that Britain's accession could no longer be resisted by France. Thus, when the second phase began, it was already pre-ordained that they would succeed.Not only is this hardly the case with the Brexit negotiations, we also know of the '70-72 period that our chief negotiator Con O'Neil famously took the line "swallow the lot, swallow it now", as the approach to the negotiations, in order to expedite proceedings.As for VAT, this was introduced in the 1971 Budget by Anthony Barber. It did not impinge upon the negotiations. We were then negotiating a treaty which, with all the protocols and additions eventually came to 200 pages. By contrast, the current consolidated treaty runs to 410 pages – more then twice the length.As to NAFTA taking "only 14 months to negotiate", this is misleading. Such agreements do not come out of the blue – there is always a lead-up to them, which is an essential part of the process.In this case the impetus for NAFTA actually began with President Ronald Reagan who in 1984 gained Congress approval for the Trade and Tariff Act. That gave the President "fast-track" authority to negotiate free trade agreements more freely.The Act led directly to negotiations with Canadian Prime Minister Mulroney, culminating in the Canada-US Free Trade Agreement, signed in 1988. Meanwhile, Mexican President Salinas and President Bush began negotiations for a trade agreement between the two countries. Into this, the Canadian agreement was folded, making it a trilateral agreement which then became NAFTA.NAFTA was finally signed into law by President Bill Clinton on 8 December 1993, effectively taking nine years for the entire process to come to fruition.Part of the game-playing by people such as Lilley, though, is to make the Article 50 negotiations appear much less problematic than they actually are, and this is one of the techniques.Another technique is the "straw man", misrepresenting the nature of the options available. Thus, according to Lilley, "three options" have already been ruled out by government: remaining in the single market; remaining in the EEA like Norway or staying in the customs union. Never mind that the EEA option is an EU-free Single Market option. He doesn't want you to know that.

In his assessment that leaves "only two realistic outcomes for Britain's future trading relationship with the EU". Either, he writes, the UK and EU 27 continue trading freely with each other without tariffs. Or we both apply to imports from each other the same World Trade Organisation (WTO) tariffs that we currently apply to the EU's biggest trading partners. Both options, he asserts, "are pretty simple and better than our present situation".



And there speaks a man only of tariffs. Like so many of his ilk, non-tariff barriers simply do not exist. They are not mentioned at all in Lilley's dissertation.



It is here that Pete's crisis of competence kicks in. Lilley spends a goodly proportion of his piece writing about financial services passporting, and a little about services, but nothing about non-tariff barriers.



Yet it is not possible to talk sensibly about Brexit options without discussing how this issue is going to be addressed. Trying to do so is like acting as if the Single European Act, the "completion of the single market" by 1992 didn't exist.



That, albeit unspoken in Lilley's current piece, is actually part of his scenario. He would have it that other countries can trade with the EU without being members of the Single Market, so there is no reason for us to remain in it.



The point he evades is that most other countries have some form of trade agreement with the EU, agreements that suit their own trading situations. The UK is in the Single Market – that is our "trade agreement" with the EU. If we leave it, we need to negotiate an alternative, and one that gives us access to Member State markets on much the same terms.



But that is not in the Lilley scenario. He would have us, in his own words, bring the issue to a head before the French, German and Dutch elections. That means concluding our exit settlement by April next year – one month after Mrs May plans to invoke Article 50.



His whole scenario isn't just unrealistic. It's plain stupid. And this is from an MP who sits on the Brexit Select Committee, supposedly scrutinising the Government's plans. On this form, he isn't even qualified to scrub the floors in the committee room. For that, you need an NVQ – more of a qualification than is necessary to become an MP.





