UK-EU talks: the British proposal

We have a text. The British negotiators have published the draft free trade agreement submitted to the European Union. Having read it, I must conclude that the European Commission should be biting our hands to sign the thing while the offer is there.

The draft agreement is wholly different in its approach from the version the European Union proposed (and which was immediately rejected). It starts not from the idea of the European Union system continuing in essence, but from the norms of international trade agreed in the framework of the World Trade Organisation (the creation of which was one of John Major’s successes). It would be an arrangement worthy of Brexit, and it still gives the European Union what it most needs, namely tariff-free trade, fair, open procurement rules and protection of intellectual property.

There are things missing. The British text does not have a reliable provision against state aid; just a brief set of provisions in Article 21. Solid obligations are needed though for the occasions when the French government (in particular) subsidises its home industries. The EU text does have detailed provisions on state aid, though allowing the Commission to wink at it anyway, which is no good from the British perspective. In addition, the text does not have a provision for co-ordinating VAT, and specifically allow cross-border tax reclaims. (See ‘Where the Remainers were right‘). There may be a good reason for this though, which awaits a second stage, and the reasons are why the Commission should hurry to sign.

This is not to say that it is bare document – on the contrary, it is 292 pages long, and it contains detail on areas not covered by the European Commission’s proposal.

One could run through the Political Declaration and tick off points which are covered and those not yet here: it does not have the declaration about human rights commitments or data protection. They are not forgotten. Most of the points in the Political Declaration that go beyond actual trade could be handled in text no longer than that which appears in the Declaration already. (The European Commission’s draft takes such paragraphs, gold-plates them and wraps them in ermine until they betray the tight text agreed with Boris Johnson.) The omitted will be needed, in the original form, but at the next stage.

There could be a good reason for omitting provisions on VAT and state aid, as examples. That reason is found in the way the European Union is constituted. Its institutions have a broad remit of exclusive jurisdiction, which includes trade matters and standards, and in these areas of ‘exclusive competence’, the European Union can sign a treaty alone. However where a matter falls within the joint competence of the Union and of the member states, then any treaty requires the concurrence of each and every member state (and Belgium cannot sign without each of its three regions agreeing). The member states of the European Union are not currently feeling co-operative, not even with each other let alone with Britain. The chances of getting 26 + 3 signatures to a complex document in the time allowed are so low that they can be discounted. Therefore the first stage needs a treaty which is fully within the exclusive competence of the European Union. Therefore the Commission should be keen to get that under their belts.

This is only the first stage then: free trade is the main prize but both sides still want agreement on state aid and VAT, and fishing, amongst other areas. Those trespass into joint competence: to bind the hands of the French government from its tendency to ‘corporate welfare’, the signature of that government is needed, and to direct the tax authorities of the member states likewise. Therefore if a treaty such as that proposed is signed, it is only the first, necessary stage and does not conclude the trade talks.

The second stage intimately affects the interest of the member states, and it is in their interests to conclude additional agreements. If negotiators aim to have a single, vast document on all matters, then any single member state or Belgian region could hold the whole thing up like Horatius on the bridge, in order to force some unprincipled concession, with the pages of the calendar passing inexorably. However, if the main deal were done, then there is less blackmail value, and it will be easier to reach settlement on all other points.

This being the case, all sides should hasten to sign an agreement which is essentially the British text, and then move on to stage 2.

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Reviewing the EU’s proposals

Almost two months ago, the European Union’s negotiators published their proposals as a draft treaty. It was at once rejected by the British negotiators – as well it might, as it was in flagrant breach of the terms agreed in the Political Declaration.

The standard European negotiating strategy is as it always was: if you want a cow, you demand the herd and negotiate down from there. They have for many years been puzzled that the British approach hitherto has been to hand the herd over without demur. Now that is not happening, which must be an even greater puzzlement to them.

The Europeans’ proposals extend over 440 pages: 316 plus appendices. Some of it is standard and as expected, and may be mirrored in the British proposals: these include free trade with no tariffs, protection of intellectual property and so forth, all of which are within the Political Declaration. Others cover areas within the Political Declaration such as state aid, public procurement and control of monopolies but take the wrong approach and are frequently one-sided, giving the European Union a remedy in case the United Kingdom breaches its side but no remedy against the European Union when it contravenes its obligations.

The main problem issue is the field of “Level Playing Field and Sustainability”: sections which render the whole proposal impossible.

The proposal is no more than a proposal, though described as a “draft agreement”. Had it been close to acceptable, it could have been reviewed as close-to-agreement work in progress, but it is not, as Number 10’s team have made clear. However, it is a document of interest in the current negotiations, and it has not been withdrawn, and so it is worth a read and an analysis.

The British proposals when fully published would be worth analysis also.

The proposals are long and involved and so a separate commentary is needed, which we are compiling on this site, and will expand over the following days:

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Beyond Brexit:

On the Brexit campaign and the referendum:

Others:

Trade talks: Summer in the City

We have run out of money, which is to say that businesses big and small, have run out of money, and the government, pledging support, has no money of its own, and is running out of that. However, Europe has run out faster because of the greater panic and harsher measures there (apart from Sweden, which seems to be getting on well).

German businesses will need cash the moment they come out of lockdown, and for many years afterwards. They are not so naïve as to think that the wave of pent-up consumer spending that will be released will fill the ledgers again. There must be another source of cash or there is cataclysm.

In the meantime, the trade talks are continuing with the European Union. The coronavirus may have brought a pause but as I wrote earlier, the calendar has not stopped running out, and the EU’s negotiators know that Boris and his team are not going to extend it that way Theresa May would have done. A great deal of action has taken place by remote conferencing and electronic communications. There will indeed be a British text, delayed from the date is was to have been put down, but there on the table shortly.

Before the plague, Brussels had pledged to cut the City off, to force Britain’s hand in other aspects of negotiation. Behind the bluster there are real lives and livelihoods in danger, and Europe’s commerce has run out of money.

The lockdown recession empties the lungs of business and stops the breath and even the strongest are left scarred. For those which survive, filling the limp body with life again will need hard cash, and it is not in Frankfurt nor anywhere else in Germany; that money can only be supplied through the wide net and innovation which the finance houses of the City of London can provide. (Only New York comes close, which is equally outside the European Union, and six hours behind.)

The City brokers and banks trade in the long term. They are backed by the world’s most trusted courts and laws and speak the world’s primary commercial language. This is why London is the largest financial centre in the world. In a time of unprecedented crisis, the City institutions are more flexible in its ways than regimented German systems permit. All this though has been recited countless times in endless publications, and bears tedious repetition only to emphasise that there is no substitute for London: Paris and Frankfurt cannot ride to the rescue alone.

Wisely, the government included stockbrokers (those involved in “financial market infrastructure”) as “key workers” expected still to be working during the lockdown.

Germany and Europe can be rescued by London. The European negotiators might have sounded tough, but they are now faced with the starvation of families and the wholesale buying up the wrecks of businesses by outsiders. They should be begging for European businesses to have continued and freer access to the City of London.

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Meanwhile, in Brussels

Nine months to go before the end of the Transition Period and the end of the customs union, and so many politicians and clerks distracted elsewhere. The news cycle has moved on: even so, the transition year is shortening and a trade treaty must be signed, and can be.

We were told on 9 March that the British negotiators would place draft legal texts on the table for the negotiating round due to take place on 18-20 March in London. That meeting was cancelled, but the European Commission did publish its own draft text. It is not unexpected and full of “non-regression” (the word appears 25 times in the text) and on the environment their “precautionary principle” that has done so much damage to the cause of innovation (“precautionary” appears 30 times). It is as if the European Union has learned nothing in the whole process, and it is fair to assume that it has not.

So where is the British text? I observed before how important it is to get your text on the table, because if we are negotiating from the Brussels text we will get nowhere and we are running straight into a dealless 2021.

The coronavirus outbreak and the reaction to it were shocks that have made many things grind to a halt. However, both Boris Johnson and Michel Barnier have had the disease and got out the other side, and Dominic Cummings is almost there, so they can be getting on with it: they can meet in perfect safety as they can neither contract the disease nor pass it on. If their teams are still vulnerable, there is remote working, but remote working must mean actual working. There are no more excuses.

A gradual assumption has been allowed to grow, and been cultivated by those with an agenda, that all the world’s affairs are suspended and there must be extensions and delays. In reality though, there is no reason at all for delay, and every reason to push on harder: the economy is failing, and Europe is hit the worst as their measures have been more extreme – failing to fix a trade deal will hurt the economies of both sides badly, but Europe is in the most desperation.

No, the world is not “on hold”. For Boris and Barnier, the epidemic is over. Any delay more is mere procrastination.

So, where is that British text?

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What is less known is the reply Aetius sent

Aetius Dux britannis salutem:

I do not know which of you wrote that letter, but I send this reply in the earnest hope that you will insert it somewhere appropriate. A grex of disgruntled woad-dodgers looking to betray their own country is not going to impress me. I am not playing your game. In fact, I will copy this letter to King Vortigern and let him put you where you should be, which with the wild beasts is in the arena, if you still have those.

Forty years ago Britannia left the Empire, and things have changed a but since then. We have moved on even if some Romano-enthusiasts like you refuse to do so. Get with the rest of your nation, for goodness sake.

The last lot of Britons I saw called me a ‘Hun-loving Moesian bastard’, before I hanged them. Let’s be clear about this: we East Europeans work hard to do the jobs you lot turn you noses up at, and if we can slaughter Franks and Saxons, so can you, you lazy stulti.

You had your Britanniae exitus – we asked you three times to reconsider and three times you killed the magistrates sent to give you the protection of the iron boot of Rome on your necks. You have never been part of the Roman Project. You never stopped speaking Welsh and we never accepted any of you unwashed savages in our ranks.

Britain is finished, forever. Gaul, Raetia, Illyria, Moesia – these are the places with a future, but Britain post exitibus is nothing, and will never amount to anything. Your name will be forgotten.

As for your ‘groans’, this idea that the Saxons are going to take over your island and destroy you culture, well it sounds like the old Celtic Replacement conspiracy theory to me.

Now, the Picts – no one nose who there are these days. They’re not going anywhere.

The Scotti: I’ve advise you to let them in. They will pour south, so just let them take charge of everything important, leave them to it and they’ll get it running smoothly again. It’s only the ones left in the north you need to worry about, if they think they’re the only Scots on God’s green Earth. The Hibernii too: you know they have a coming-of-age ritual, that every youth reaching manhood has a bag packed ready to move to Britain. You’ll learn to love them, even if the favour is not returned.

And the Angles and Saxons swarming over the sea – they’ll never amount to much.

Tomorrow I have a battle to fight over at the Campis Catalaunicis, but after that, be assured that I will pay a great deal of attention to ignoring you.

Ualete et i in malam crucem.

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