Where the Remainers were right

Now the Withdrawal Agreement is signed by both sides and nothing is in the way between now and Brexit on Friday, we can say openly that Remainers did have a point sometimes. Not in the conclusion, but in several important issues that must be addressed in the trade negotiations that are to come.

The deal must be done in eleven months. The guideline is the Political Declaration, as mightily improved by Boris Johnson. The issues flagged up by the Remain side in the referendum campaign and ever since still have to be dealt with, and they can be.

The most important issues, specifically tariffs, are to be dealt with according to the Political Declaration. There is detail though, and issues not fully covered.

To take a few random examples:

Value added tax

VAT is an odd but working system, not always understood by the man in the street if he des not run a business. We all pay VAT on purchases, including businesses. A VAT-registered business charges VAT on its sales, and sends the tax to HM Revenue and Customs at the end of the quarter, but it also reclaims from HM Revenue and Customs all the VAT it has paid in that quarter on its purchases: this ensures that although the tax have been paid at every sale, the burden falls only on the final sale to the customer.

It is the same system across the European Union, so a business may reclaim for tax paid on a purchase from abroad in the EU too, and a European business may reclaim from its own tax authorities the VAT paid to a British supplier. If after Brexit there is no continuing VAT co-ordination then businesses lose out. Either sales abroad would have to be VAT-free, which puts import at an unfair advantage over those purchases in the home market, or sales would continue to have VAT added and there could be no reclaim, putting importers at a disadvantage. In addition, there wou7ld be no adjustment between tax authorities for money collected across borders.

Getting round this will require continued co-operation and sharing of data between tax authorities. An upcoming problem may be where VAT standards begin to diverge between Britain and the continent, specifically as to what is VATable and what is not. It should not be problematic, as there are differences already, but this must be flagged up.

Intellectual property

Intellectual property is trademarks, patents, copyright etc: it is owned and is a valuable asset but is intangible and exists only because the law recognises it. This is vital to continued commercial relationships. Britain has long led in the field and this was recognised when the European Intellectual Property Office was to be established in London. (It is now finding a new home.)

At present, most patents and trademarks are registered nationally, but there are Europe-wide registrations, which is very convenient, and saves money for IP-owners. If patents valid across the EU are suddenly not recognised in Britain, or vice versa, innovators are open to predatory exploitation, and a valuable asset have been stripped from them without compensation. The Political Declaration recognises this field, and the Withdrawal Act automatically validates Europe-wide patent and trademarks as if they were British – and they must be maintained by continued registration as British patents and trademarks are.

It would be more convenient for a degree of co-operation to continue between the United Kingdom Intellectual Property Office and the European Union Intellectual Property Office to enable entrepreneurs to register across both territories with minimal duplication.

Home enforcement of standards

Product standards will diverge between Britain and Europe pretty quickly, which is one advantage of Brexit. However, that means that British authorities will no longer be able to certify compliance, with the familiar “E” mark. There may be stopgap ways round this, but ideally some system is needed whereby British authorities can certify compliance before the goods in question cross the Channel (or indeed the border). Such a certification system would be under the control of the EU and the ECJ as it is their rules.

If such a system, as sort of EU-licensed certification and enforcement system were introduced, it opens the possibility of having the same arrangements with other major markets.

Farm subsidies and consequent tariffs

It is generally accepted on this side of the Channel that the EU farm subsidy system is a form of lunacy. However, the consequences of dropping it entirely are interesting. If, for example, French beef is subsidised but British beef is not, will that mean that French beef imports must be taxed to remove the price advantage? On the other hand it has been argued that we should not stand in the way of another country’s government paying to make our food cheaper.

On the other hand, we may ask where the subsidy actually goes: does it feed the farmer’s family or does it simply allow the big supermarkets to drive the farm-gate price down, so the subsidy is actually ending up in the supermarkets’ pockets?

There are serious concepts to be considered, and no one right answer.

If subsidies exist on both sides of the Channel, to balance each other, if they are calculated on a different basis, this opens a question of genuine equivalence. They will diverge, and it must be considered that the subsidy system was largely invented to benefit inefficient French farms – albeit that they may not be as inefficient these days as when the system was devised. Britain always had a bad deal from the subsidy system, which was the justification for Mrs Thatcher’s Budget Rebate.

Financial services

This was always a difficult one given the importance of financial services to the British economy and lack of consideration of them in the negotiation. The intangibility of the services is a problem for those considering the field, and the lack of understanding of the enormous scope that comes under this label.

However, financial services out of London are also of vital importance to the European economy: if a German company wishes to raise finance, he could look to the Frankfurt Börse, but the world’s top market is London. If European regulators cut London off, they could bankrupt their own companies. Having said that, they may not appreciate this, until their pensions stop being paid.

The access of British companies, and British-based companies, to the European financial market should be uppermost in the minds of negotiators.

Movement in academia

One of the big moments early in the referendum campaign was an open letter by 200 academics arguing that Brexit would be disastrous because it would end the ability of academics to move between institutions. It was one of the most ridiculous arguments in the campaign: it only takes a line in the immigration rules to allow such movement, without the need for panoply of EU bureaucracy.

That said, it is a good point that academia should flow freely and so we do need that rule. It might say “Send your brightest intelligences to our universities to shine their wisdom in those halls – because on the current showing there is none there now.”

Aviation

Aeroplanes will not stop at borders as we were told, but do not forget to put the standard international agreements in place.

In addition, our airspace is minutes from European airspace, mere seconds in the case of the Channel Islands and Gibraltar, so co-ordination is required, as indeed we should co-operate with all neighbouring states, not just in Europe.

Fish stocks

The current position is that British seas will stay British. Some agreements might be possible, but nothing is on the horizon.

However, it is not just about who can fish in what waters: also we have to think about fishing stocks. Fish do not carry passports, and if Spaniards scoop up all the fish in European waters before they have reached the our waters, those stocks will not recover then next year.

Quotas are unpopular with fishermen, but their children’s livelihoods depend on those fish being there in the next generation. It will be easier if only British boats are allowed about as they can do less damage than if half a dozen nations are emptying the same seas. They will have to accept quotas though.

The Brussels Regulation on civil disputes and judgments

This is less of a niche area than one might think. When a commercial or consumer dispute heads to court, the Brussels system decides which country’s courts should deal with it. The mutual enforcement of judgments is another matter covered. Barristers have been particularly vocal in this area, or at least those who deal with international disputes.

The issues could be handled simply by the wider international conventions which exist already; specifically the Hague Convention. An extension of the Brussels system in some way is possible, but this has the objection that the EU’s European Court of Justice would put itself in charge. It may be better to agree a “Hague +”, or just stick with the Hague Convention.

And also…

There is far more than these random ideas have brought to the surface. Al are eminently solvable, but that does not man ignoring them. No such issue should be forgotten,, and if it was a point urged by the Remain side, it may be a good point – they had their reasons for arguing for Remain, so do them the courtesy of listening to the reasons and dealing with their legitimate points.

See also

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Author: LittleHobb

Solitary, poore, nasty, brutish, and short

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