Post-Brexit: Technology won’t make the Irish border disappear

The Brexit talks have stalled over the question of the Irish border. They were always going to, if not now, then later on in the process. This isn’t because the DUP and the Irish government are being difficult. It is simply because the position of the UK government is incompatible with the position of the UK government. This paper, by a group of legal academics, put it succinctly:

The UK’s negotiation positions are mutually exclusive; it is not possible to simultaneously exit both the EUCU [Customs Union] and the Single Market and fully avoid a physical border.

The customs union has a border around it. That’s the whole point of it. At the moment, both the UK and the Republic of Ireland are inside that border. If the UK places itself outside that border, then the new border becomes the UK’s border with the EU. In declaring that the UK will leave the EU Customs Union and Single Market, while also saying that there will not be a hard border in Ireland, the British government snookered itself before the EU had even picked up a cue.

Having realised, belatedly in most cases, that this is a major stumbling block, pro-Brexit politicians have argued that it would be possible to create an invisible border – a border that complied with all the legal requirements but that no-one could actually see. It would therefore still feel as though there was no border. People on either side of the border could commute, shop and trade without being stopped for customs checks. Electronic gadgets, drones and container tagging are among the suggestions put forward, all of which might help. The trouble is, none of these will completely remove the need for border checks.

Last month, the House of Commons Northern Ireland Affairs Committee took evidence from Norwegian and Swiss customs officials. The conversation is quite amusing, in parts, as the Norwegians patiently explain that, despite high levels of co-operation, sophisticated technology and their country being in the EEA, there still have to be some customs checks. As the BBC reported, Dr Bock, the Swiss official, said that an invisible border was theoretically possible but then went on to give a number of practical reasons why it would not be. Their operation was, he said, so slick that they now only needed to stop around 2 percent of those crossing the border. But with 13,000 commercial vehicles crossing the Irish border daily, that would still mean over 200 searches each day. Furthermore, Dr Bock explained that the Swiss blitz the border every so  often and conduct random checks on all commercial vehicles:

From time to time, we are doing control days where we check more or less everything.  Of course, this only works for one or two hours and then every truck driver in Europe knows that we are doing controls.

Even when his people are not obvious, they are still watching:

When you do not see us at the border, it does not mean that we are not there. We have people on nearly every international train. We are in unmarked vehicles around. We have observation systems in place.

And however good the technology is, this is still a physically policed border:

I am a big fan of technology: I am now leading the biggest digitisation project in Switzerland, with 400 million Swiss francs.  But, finally, you should remember that Customs and Border Guard work is fieldwork done by people.

At the end of the day, you need people who are performing checks.  You need people who have local knowledge and local feeling.

A fascinating paper published by the European Parliament last month outlines some of the solutions that may be possible if the UK and Republic of Ireland adopt best practices from around the world and state-of-the art technologies. It concludes that it would be possible to significantly reduce the number of border checks. However, as the report’s author clarified recently, this still wouldn’t completely remove the need for a border:

A further problem with technological solutions is that most of them rely on CCTV and number plate recognition. The UK government’s commitment to no physical border infrastructure could be interpreted as ruling these out. Cameras might also become targets for sabotage, as this European Parliament paper (part of the same release as the technology one above) warns:

Any such system, whatever the details, would involve electronic devices to identify and record every vehicle crossing the border. These devices could be easily put out of action, sabotaged, or destroyed, just as traditional customs posts could be.

And even when you have identified rogue operators, you still need people on the ground to find them.

Any such system would have to deal with vehicles that were not equipped to cooperate with the system. They would need to be identified and traced. Recognition only by number plates would be insufficient: number plates can be easily changed or falsified. In theory, all vehicles could be marked automatically by laser, and it is suggested that non-reporting vehicles could be traced by satellite telemetry, or by random checking on the ground to identify laser-marked vehicles. But any such system would involve a significant lapse of time between the time of crossing the border and the time when the vehicle was inspected, if it ever was. During that time the goods could be concealed. Even if satellite telemetry were regarded as feasible, it would merely locate the vehicle, and it would still be necessary to reach it on the ground for inspection. In short, any such system would necessitate a considerable degree of physical surveillance within the importing region, and could not be relied on to be effective to control smuggling.

A customs border means that someone has to search vans and trucks. As Dr Bock, the Swiss customs official, said, however good your technology you still need boots on the ground.

The truth is that, if it were that easy to invisibly police customs borders, countries would have done it by now. The fact that even the most technologically advanced countries with the most friendly and co-operative relationships with their neighbours still need to carry out customs checks shows that we are unlikely to be able to eliminate the border in Ireland with satellites, flying machines or any other gizmos.

Which leaves us back where we started. The UK government can’t leave the Single Market and the Customs Union and, at the same time, avoid a physical border in Ireland. Perhaps some form of words will be found next week to allow us to fudge our way to the next stage of the Brexit talks but, if it does, the issue will just come up again when we start to discuss trade terms. All this talk of technological solutions reminds me of those corporate bosses who have no idea how to get out of the mess they are in but assure their staff that everything will be OK once the new system is implemented. Technology is never enough on its own though. It certainly won’t dig our government out of the corner into which it has painted itself.

Perhaps the Irish have done us all a favour this week by bringing to a head a problem that has been there all along. Contrary to the British stereotyping, the Irish don’t believe in fairies any more. They know there is no magical solution to the border question and, as the UK started this whole Brexit process, they are quite reasonably asking our government for answers.

Update: Chris Giles has a piece in the FT on just how much of a pain in the backside being outside the customs union is:

For trading companies, each load requires a customs declaration, multiple forms and stamps by the tax authorities to ensure that the formalities are closed on each side before goods cross the tax border. Within the EU none of this applies because complete regulatory alignment is married to an EU VAT regime, all within the customs union. The EU VAT system has its problems, but ensures that goods can flow across borders with no border formalities.

The Swiss-French border is efficient. There are no applicable tariffs. Regulations for goods are fully aligned. There is a common travel area between the two countries without the need for passport checks. But the border requires hard infrastructure because Switzerland is not in the EU VAT regime nor its customs union. Border frictions have separated markets either side of the border to the detriment of consumers.

Regulatory alignment would remove only some of Brexit’s border barriers in Ireland. The UK and Ireland should take note.

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34 Responses to Post-Brexit: Technology won’t make the Irish border disappear

  1. Dipper says:

    Quite a lot of people disagree with this. For instance Lord Trimble does https://blogs.spectator.co.uk/2017/11/david-trimble-the-taoiseach-should-stop-trying-to-out-sinn-fein-sinn-fein/ and the head of HMRC.

    “Someone has to search vans and trucks.” Lots of goods come into the UK from outside the EU without being searched. They are pre-cleared with customs before arrival. It has already been suggested that small business can go back and forth without checking and larger consignments would need pre-clearance. There are lots of things that could currently go across the border and avoid different taxes but they are not checked, so there doesn’t seem a clear reason why they cannot continue to do that for small business and individuals.

    The Swiss example is a counter example to your case. It shows Customs operating throughout the country. It is not the case that if you smuggle goods through customs then magically you can legally do what you like; the law and regulations still have to be obeyed, and that can be enforced in the country not necessarily at the borders.

  2. P Hearn says:

    The border is the EU’s to enforce. The customs union being protected is the EU’s, not the UK’s.

    The UK can and should state that it will recognise EU regs for agriculture etc., and therefore has no need to stop vehicles entering NI from the south for regulatory reasons. This should be done on a whole-of-UK basis, not just NI.

    Further, the UK can and should declare unilateral free trade with the EU, so there will be no tariffs to police or collect for anything coming in from the EU. The car companies would likely welcome this too, as they can then continue to import their EU parts without delay or cost.

    For the tiny number of Irish operators suspected of being up to no good, the police can track those vehicles and stop them at points other than the border. This will be both smarter and politically acceptable: nick ’em at their destination or close to it – not at the border.

    All of which will leave the EU to decide if they want to impose tariffs or regulatory inspections on vehicles entering the Republic from the north. It’ll be like the Severn Bridge, with tolls to get into Wales, but mercifully none to get out. Even that’s being abolished now.

    Should there be any complaints about the border, they can be directed to Brussels and Dublin. Meanwhile, the UK can look for other countries with whom we can replicate zero tariff deals.

    • Dipper says:

      I agree with your general view, but I suspect the EUphiles will say that its really very complicated, that its not about tariffs it is about regulations, and in the absence of the same regulations then each item needs inspection,just to make sure we aren’t selling them beef that is in fact horse, something the EU regulatory regime failed to do but is conveniently ignored.

      In which case it is worth reading this https://capx.co/a-narrow-minded-brexit-is-doomed-to-fail/ which states the EU is about enforced detailed regulation which stifles innovation and wealth creation, and the the rest of the world is moving on. And we should hurry up and join it.

      • P Hearn says:

        I don’t suppose such a pragmatic and straightforward approach will be taken by the UK government, let alone the EU, Dipper. Is there any sense that the EU wants Brexit to work? Hardly going to be great if we skip out for a few billion leaving fees and show the EUmperor has no clothes. That said, I don’t think anyone ever made a bigger mess of a negotiation than May/Davies.

        The emphasis so far has been on taking a couple of bells off the SM and CU, and calling that Brexit. That’s like pulling a couple of wires out of Jodrell Bank and hoping it still somehow sort of works.

        Instead, we should be aiming for a focused, CETA++ arrangement with the EU, hopefully a template for others. Canada has signed up to trade with the EU on terms better than WTO, but without free movement, the ECJ having any say in Canada, no £10bn annual payments to the EU slush fund, no pensions liabilities, no being told what tariff we must charge on oranges we import. Suddenly it becomes clear that you don’t have to pay to trade, or in our case, pay to maintain an eye-watering trade deficit. Given that we start from 100% regulatory compliance, 7 of the 8 years of negotiation should already be out of the way for our own FTA.

        Day one we should have opened with “we know how important the four freedoms of the SM are to you all, so we won’t insult you by asking for exceptions we know you can’t give. We’re preparing for a WTO exit on March 29th 2019 as our fall-back position, but would like to offer the EU a zero-tariff deal, with mutual recognition of product standards from day one. To make this easy, we’re adopting EU standards as our starting point, and we’ll agree an independent dispute resolution mechanism in case our standards evolve too far away from yours or vice versa”.

        We’ve ended up getting stuck discussing a border, the need for which a good trade deal would obviate. Only the EU could railroad discussions in completely the wrong sequence – something they must have realised when suddenly it turned into “sufficient progress” as the test to move to so-called Stage Two.

        I’ll give your link a read a bit later on.

    • Almar says:

      “Further, the UK can and should declare unilateral free trade with the EU”. Would this be compatible with WTO rules unless the UK also has free trade for all imports, from any WTO member? A few economists, such as Minford, might favour unilateral abolition of all our tariffs for all goods wherever they come from, but very few other people would accept such a policy aim.

      • P Hearn says:

        I’m suggesting it as the basis of an FTA with the EU. If the EU decided to turn down regulatory equivalence and no tariffs, then of course such a deal may not be legal per WTO, (I don’t profess to be an expert), so we’d trade on basic WTO terms with the EU, with a hard border and duties etc.

        Would the EU want to be seen as the party that caused that? How would that look to its other members and Ireland in particular? It would be interesting to see them defend rejection of such a common-sense deal. In effect, the UK could turn the Irish border from a thorn in their side to leverage in the negotiations that encourages the EU to accept an FTA for political reasons. Let’s not forget, were it just trade, and FTA would already be in place, such are the economic interests at stake on all sides.

        The point of making WTO the default option for which we are preparing, demonstrates we are serious about that route, not as a threat, but as a sensible precautionary approach. That might also help to focus minds.

    • Blissex says:

      «The border is the EU’s to enforce. The customs union being protected is the EU’s, not the UK’s.»

      If that attitude prevails, a lot of Eire “entrepreneurs” will become rich defrauding HMRC of VAT. It will be HUUUUUUUGE.

  3. dazwright says:

    All of the fans of a purely technological border seem to miss the point of a border. It’s fine if you have two countries following largely the same rules and with little difference in price. It’s the point that criminality becomes profitable that it ceases to work. The larger the difference (in the single market and not in the single market) then the larger the profit and the more ruthless people are likely to be.

    A border will incentivise criminal gangs and Nothern Ireland/Republic of Ireland really don’t need rich criminals. A light touch border will just create richer criminals.

    • Dipper says:

      see the article I linked to. That situation already exists. Crimes associated with smuggling across the border don’t apply just at the border, they are not legal within the relevant nations.

      • Micky says:

        would need a full labotomy to makebelieve anything coming from that capex right wing rag nonsense, makes the daily heil seem positively left wing, so funny that people like dipper get sucked in and spat out. Lol.

  4. @P Hearn & Dipper,

    The ony way to avoid a border is to ensure complete regulatory harmonisation (or alignment, if you prefer). But while this might remove the need for a border between country A and country B in respect of locally exchanged goods, it doesn’t remove the need for a border if either A or B tranship goods from a third country. The only way to avoid that is through a common external tariff and common production standards, which means a customs union and a single market.

    “The UK can and should state that it will recognise EU regs for agriculture etc.” That would constrain the UK’s ability to negotiate other trade deals based on different standards. If it wanted to allow the import of chlorinated chickens from the US, it would then be in breach of EU food safety rules. That would mean British chickens could not be exported to the EU without proof of origin, which means border checks.

    “Further, the UK can and should declare unilateral free trade with the EU”. Under the WTO Most Favoured Nation rule, that would require the UK to extend the same terms to all other countries. This can be done, but it wouldn’t obviate the need for a border with the EU because the UK’s external tariff (whether zero or WTO defaults) wouldn’t match that of the EU Customs Unions while production standards would likely diverge (i.e. the UK would probably bias towards a freel-for-all).

    “We’ve ended up getting stuck discussing a border, the need for which a good trade deal would obviate”. A Canada++ deal is possible, but it is worth remembering that under the CETA terms Canadian goods coming into the EU require border checks (essentially to ensure they’re not transhipped goods from the US trying to evade tariffs). A comprehensive free trade deal between the UK and the EU is perfectly feasible, but it will still require a hard border.

    There is nothing inherently wrong with a border between the UK and the EU, despite the overhead costs for business. The issue in Ireland is political and bound up in honouring the Good Friday Agreement’s trajectory of increased cooperation and mutual recognition. What strikes me as odd is the insistence of many leavers that a border can be avoided, which goes against not only history but contemporary practice. If you think Brexit is a good idea, you should think borders are a good idea too.

    • Dipper says:

      Well, it depends what you mean by border, and specifically why regulations can only be administered at a physical border.

      Like the entire sane population, I would prefer to take medicines and pharmaceuticals that have been through a process of regulation not ones that have no regulation. But that is something that happens throughout an entire industry, not something that is tested at a physical border. If a box of drugs turns up at a border post, then there is generally no non-destructive means of assessing whether the drug is what it claims to be, and the customs inspector probably doesn’t posses a PhD in Pharmacology or Manufacturing Engineering so is not qualified to make an assessment based on the physical and documentary evidence. Hence, what are they actually checking and why do they need to do it in a shed on the Newry-Dundalk road?

      I see no logical reason why regulatory compliance requires physical checks at a border and lots of reasons why compulsory physical checks at a border are a complete waste of time. Hence my conclusion is that this issue is a politically motivated attempt to force a political solution on the UK which is disadvantageous to the UK, and hence is why we should walk away because until we do we will not get a sensible deal.

      • The border check for medicines is not a scientific test of what’s in the bottle but a check on the paperwork to confirm its origin – i.e. where it was manufactured. If you know if was made in country A, and that country has standards that match or exceed those of your country, then you will let the goods through. If the origin of the medicine turned out to be country B, which has inadequate standards relative to your local standards, then it will be turned back.

        The bottom line is that you cannot avoid border checks of some sort unless you have both harmonised standards and a common external tariff. There is no all-encompassing technological solution to avoid this. If there were, it would have been deployed widely by now (consider the cost-savings in transport time and management overheads) and visible borders would have been consigned to history. I think part of the incredulity displayed by leavers on this topic arises because we have all got used to largely open borders within the EU (and completely open within the Schengen Area). The reality elsewhere in the world is lorry queues and time-consuming paperwork checks.

        • Dipper says:

          I just don’t agree with this, and your example illustrates my point.

          The responsibility for ensuring that medicines have the right paperwork surely rests with the organisation dispensing the medicines. That is where the expertise and control rests, not with a man in a shed on the Newry-Dundalk road. If someone did smuggle medicines across the border what could they do with them in the absence of the correct paperwork? It would still be incumbent on the dispensing organisation to check the paperwork was all in place.

          We have a problem in the EU at the moment with on-line medicines. See https://www.nhs.uk/NHSEngland/AboutNHSservices/pharmacists/Pages/internet-drugs.aspx. Customs are not capable of policing the hard border between the EU and the outside world for internet medicines and alternative in-country methods have to be used.

          To give an example of a place where regulations differ between legal entities and there is no hard border, consider gun laws in the US (see https://www.inverse.com/article/37141-state-gun-law-maps). Arizona has no background checks, but California does. There is no hard border between California and Arizona to inspect everyone coming into California from Arizona and if they have a gun check that they also have the background checks that would entitle them to have a gun in California; there are simply laws in Arizona, different laws in California, and an open border.

  5. Agree with your analysis David but if memory serves Bariner has pretty much dismissed the idea that the UK could have anything more comprehensive than CETA should it leave the SM. Canada+ is pretty much off the menu which, given the UK’s desire for regulatory autonomy, makes anything other than “a basic FTA” impossible and, from the Brexit head-banger point of view, anathema. CATA++ is the Single Market.

    I find it increasingly hilarious that, given the stated intent of Brexiteers to “take back control” of things like borders and regulations, when the reality of what this actually means becomes evident the retort is “let’s not have any regulations and borders”.

    • You’re right that the EU27 are insisting on an off-the-shelf model, which means either vanilla Canada (CETA) or Norway (EEA – which the UK can’t accept because of FoM), but you’d expect them to do that at the outset. Flexibility is something you should concede grudgingly.

      Only time will tell if they are prepared to consider substantive additions to the Canada model. In reality, this will come down to self-interest (i.e. the EU27 will be the ones doing the cherry-picking), which is why the idea of sectoral deals (possibly financial services and automotive) hasn’t completely expired yet.

      Whatever happens, I suspect we will end up with a hard border. To avoid this we’d need to de facto remain in the SM and CU, which would make Brexit pointless in its own terms. The issue is whether Northern Ireland can be treated as an exception, and the impediment to that has got nothing to do with tariffs or food standards.

      • Blissex says:

        «Flexibility is something you should concede grudgingly.»

        M Barnier has completely ruled out any CETA+ or EEA- deal, also because the UK is never going to offer anything substantial in exchange of that. I suspect that the UK could buy a FoM exemption for an EEA deal by paying EU development fund contributions of the order of £200B a year, but I also think that nothing could buy passporting rights for the City without full regulation from Brussels and Frankfurt and ECJ jurisdiction. It is a matter of sovereignty for the EU27: they certainly don’t want their financial markets in practice regulated in London by the Treasury and the BoE.

        «the idea of sectoral deals (possibly financial services and automotive) hasn’t completely expired yet.»

        That idea relies on violating WTO rules in a massive way. A number of hard-exiters want also to exit the WTO, because they cannot understand whey unnaccountable, faceless bureaucrats in Geneva have grabbed control of which tariff and which types of trade deals the UK can do. It is a sovereignty issue.

        It is like the various proposals for no incoming customs checks in northern Ireland: WTO rules dictated by faceless, unaccountable bureaucrats would force the UK to do the same for imports from any country at any incoming ports in the UK.

      • Blissex says:

        ₣rom a very recent couple of speeches by that unaccountable, faceless bureaucrat, M Barnier, who dares, DARES, to contradict her Majesty’s Own Secretary Of State For Exiting The EU:

        https://www.lesechos.fr/monde/europe/030770026245-barnier-le-royaume-uni-ne-pourra-pas-avoir-les-avantages-de-la-norvege-et-les-faibles-contraintes-du-canada-2124526.php
        «Q: Concernant la relation future, êtes-vous prêt à signer un partenariat privilégié et sui generis ?
        A: Dès l’instant où le Royaume-Uni nous dit qu’il veut sortir du marché unique et de l’union douanière, nous allons devoir travailler sur un modèle qui se rapprochera de l’accord signé avec le Canada. Le marché unique est un ensemble de règles et de normes, c’est une juridiction commune. Son intégrité n’est pas négociable, et l’autonomie de décision des 27 non plus. Soit vous êtes dedans, soit vous êtes dehors. On ne peut en aucun cas imaginer un système qui comporterait les avantages dont jouit la Norvège avec les faibles contraintes du Canada… L’intérêt stratégique de notre continent est de nouer un partenariat avec ce très grand pays qui dispose d’un siège permanent au Conseil de sécurité des Nations unies. Mais ce n’est pas une raison pour affaiblir le marché unique, ou pour faire, comme certains en sont tentés, je ne sais quel lien entre les dettes du passé et la sécurité future.»

        http://europa.eu/rapid/press-release_SPEECH-17-4765_en.htm
        «On financial services, UK voices suggest that Brexit does not mean Brexit – Brexit means Brexit, everywhere.
        They say there would be no changes in market access for UK-established firms. They say joint UK-EU Rules would be decided in a new “symmetrical process” between the EU and the UK, and outside of the jurisdiction of the European Court of Justice. This would contradict the April European Council guidelines, which stress the autonomy of EU decision-making, the integrity of our legal order and of the Single Market.
        The legal consequence of Brexit is that UK financial service providers lose their EU passport. This passport allows them to offer their services to a market of 500 million consumers and 22 million businesses.»

        • Blissex says:

          In evidence:
          travailler sur un modèle qui se rapprochera de l’accord signé avec le Canada
          Soit vous êtes dedans, soit vous êtes dehors.
          On ne peut en aucun cas imaginer un système qui comporterait les avantages dont jouit la Norvège avec les faibles contraintes du Canada
          On financial services, UK voices suggest that Brexit does not mean Brexit – Brexit means Brexit
          The legal consequence of Brexit is that UK financial service providers lose their EU passport.

      • I think the best the UK could possibly hope for from a Canada type deal is the inclusion of financial serves but in order for there to be any financial serves left to protect the UK will need to negotiate a transitional deal as part of A50 withdrawal to get it to the point where this FTA can be implemented, probably minimum 5 years post withdrawal, the UK’s current regulatory hominization notwithstanding (the EU will be in no hurry to negotiate a FTA with the UK having got what it requires from the withdrawal agreement).

        This transitional period will by necessity be spent within the Single Market (even if not by name) and from what I have read of today’s agreement this seems implicit, although the raison d’être given appears to be to protect the RoI/NI soft border.

        • Blissex says:

          «the best the UK could possibly hope for from a Canada type deal is the inclusion of financial serves»

          That’s the so-called “CETA+” option, and it is inconceivable — the EU27 will never agree to have the EU’s financial markets controlled and regulated from outside the EU27. It iis a very basic issue of sovereignty. A non-EU government won’t be allowed to decide unilaterally the regulatory and policy environment for EU-wide finance. M Barnier has been very explicit about it.

          Try to imagine the opposite: the largest financial centre in Europe is Antwerp instead of London, the UK exits from the EU, and the EU demand full passporting access to the UK financial markets for Antwerp based mega financial conglomerates while they remain solely regulated and policed by the EU Financial Authority and the EU Central Bank, under the sole jurisdiction of the ECJ, in exchange of absolutely nothing, “just because”. Would the UK surrender control of their financial markets to the EU27?

          • Dipper says:

            under those circumstances the main concern would be how on earth are UK companies going to sell their bonds, obtain foreign exchange, do interest rate swaps? The primary function of financial markets is liquidity and London currently provides that for Europe.

            For an alternative view on how the city will evolve under Brexit see this: http://www.cityam.com/275177/brexit-and-city-unpicking-10-myths-refuse-die-city-grapples

          • Blissex says:

            «concern would be how on earth are UK companies going to sell their bonds, obtain foreign exchange, do interest rate swaps? »

            There is a big difference between “UK companies” and “UK branches of UK companies”.
            Without passporting “UK companies” will be able to trade in the EU27, but only through branches operating substantially based in the EU27, that is with traders and executives resident in the EU27, and the branches being subject to policies and regulation by the EU council and the ECB, and taxation by the EU27 governments. The UK headquarters will continue to have ownership and business control of the the branches in the EU27, and will be able to repatriate the (after-tax) profits.

            It is the same currently for Japanese and USA financial companies trading in the City of London: they cannot do it directly from Wall Street or Tokyo, they have large branches in the City subject to regulation, policies, taxation by the UK government; it is a matter of sovereignty.

            Before exit “passporting” was possible because there was joint policy making and regulation among all 28 members, including the UK, of all financial market, including the City of London, Paris, Amsterdam, Frankfurt, Milan, because of pooled sovereignty.

          • Blissex says:

            BTW by “branches” I really means “owned subsidiaries incorporated in an EU country”, because part of the story is that they will need to have their own capital and their own CEOs and boards accountable to EU27 regulators. Consider the case of bankruptcy: if they were mere branches of a London company it would be a lot more difficult than being their own corporate entities. Again, same as for London based subsidiaries of Wall Street and Japanese companies.

    • Blissex says:

      «the reality of what this actually means becomes evident the retort is “let’s not have any regulations and borders”»

      The same will happen with “Freedom of Movement”: the retort will be “let’s have massive immigration from Asia and Africa and Latin America of indentured serfs to work in the sweatshop that we will need to compete worldwide with businesses in the Vietnam, China, Philippines, Mexico”.

      https://www.ibtimes.co.uk/buyout-boss-says-brexit-will-be-good-his-business-will-mean-30-cut-uk-wages-1602631
      One of the biggest names in European private equity said that Brexit will be good for his business, but will mean a 30% wage reduction for UK workers. … He added that EU immigration will be replaced with workers from the Indian subcontinent and Africa, willing to accept “substantially” lower pay.

      https://www.bloomberg.com/news/articles/2017-10-24/mexico-s-2-50-an-hour-wages-lure-jobs-south-amid-nafta-talks
      A starting salary for a Tijuana factory worker, including benefits, is the equivalent of about $2.50 an hour, according to Baldwin. The average hourly wage for U.S. assemblers is $14.93 and the lowest paid 10 percent of the group earns $9.24 an hour, Bureau of Labor Statistics data show.

    • Blissex says:

      «given the UK’s desire for regulatory autonomy, makes anything other than “a basic FTA” impossible»

      There is a common fundamental misunderstanding of what the EU27 negotiating position is: the only two outcomes acceptable to the EU27, for strategic political reasons, are either EEA+CU or, much more preferably, hard-exit followed (perhaps) some years later by a “basic FTA”. The Eire border issue forces a choice between these two outcomes.

      In practice the EU27 are for the hardest of hard-exits, their line is that England and Wales have voted to get rid of *all* the advantages of EU membership, and the EU27 intend to respect that decision to the fullest extent possible (especially for financial services!), to make sure nobody can say that the EU27 have tried to undo the sovereign and independent decision of England and Wales.
      it is really as simple as that.
      Soit vous êtes dedans, soit vous êtes dehors.
      UK voices suggest that Brexit does not mean Brexit – Brexit means Brexit

      • Blissex says:

        «for strategic political reasons»

        I’ll try to explain my understanding of those:

        * Since WW2 the USA, and their bag-carriers, the UK have found convenient to exercise their dominance of the first-world via multilateral treaties and treaty institutions like the IMF or NATO, where they had overwhelming influence and control.

        * Because the the rise of China and India and Russia into nearly the “first-world”, those multilateral treaties and institutions are not going to be entirely dominated by the USA.

        * Therefore the USA since the collapse of the USSR have chosen strategically to replace multilateral arrangements that run the risk to dilute their power with unilateral or bilateral arrangements that they can more easily dominate.

        * Therefore the UK since the exit vote have decided that the strategic interest of the UK is is to undermine and disgregate the EU, considering it a vehicle for excessive french influence, and to replace it with bilateral relationships with the individual members.

        * Therefore every initiative the UK government have done since June 2016 has been aimed at disgregating the EU, not limited to negotiating a post-exit arrangement : the attempt by T May to negotiate the terms of exit directly with member heads of government, sending more recently B Johnson to try to talk to various eastern European governments into joining the English Free Trade Area; in particular demanding a “deep and special” agreement that is “creative”, so that many other EU members would want the same, ensuring the fragmentation of the EU.

        * The EU27 have decided that overall following the french lead within a multilateral structure gives them a lot more influence than having bilateral deals with the UK, and therefore are unified behind the EU negotiating team, and have given it a mandate that effectively covers only two outcomes: EEA+CU, or the hardest exit, as chosen by the english and welsh voters.

        * The top level (Sir Humphreys) UK civil service have fully realized this picture, and even parts of the government, in particular B Johnson, who has understood that the UK Foreign Secretary has a position of no influence, and that the only value of his having that role is to use its evanescent prestige as a pulpit to play to the domestic electorate and in particular to the Conservative MPs and their constituency associations. G Williamson seems to have reached the exact same conclusion for the Secretary of War role he has grabbed.

        • Blissex says:

          «Therefore the UK since the exit vote have decided that the strategic interest of the UK is is to undermine and disgregate the EU, »

          BTW there is here a big difference between USA and UK: while the switch from multilateralism to unilateralism/bilateralism is bipartisan in the USA, seeing the EUSSR/Fourth Reich as the enemy to disgregate is a Conservative-only attitude in the UK. When P Hammond’s tongue slipped and he used “enemy” to refer to the EU27, he really meant “enemy of the Conservative Party”, not of the UK.
          It is a very tory attitude to want to be either top dog or wreck it.

        • Guano says:

          This is linked to the idea of the Legatum Institute that there is now a small window of opportunity to change the whole world trading system. (The window of opportunity presumably being the period of the Trump presidency.). The UK is being used as a battering ram to try to damage the Single Market (involving people who used to swear allegiance to Thatcher who helped create the Single Market).

          • Blissex says:

            «Thatcher who helped create the Single Market)»

            M Thatcher BTW helped create the Single Market because she claimed that UK companies would dominate it by driving to bankruptcy their french, german, etc. competitors: thanks to her policies UK companies would have much cheaper workers who would be unable to strike, without costly extras like pensions or paid sick days or paid vacation days, and paying lower dividend and corporate taxes thanks to the elimination or shrinkage of big costs like the NHS and welfare.

            Her point was that in the level playing-field of a continental single market the lumbering state owned or sponsored french and german industrial dinosaurs weighed down by the ballast of socialist welfare and wage policies would be vapourised by shark-like low-cost thatcherite industries from the UK.
            For her the Single Market was to be the rebirth in a different shape of Imperial Preference.

          • Guano says:

            Especially after reading some of Ivan Rogers’ comments, I have a distinct impression that the UK (especially under Conservative governments) tried to game the European system and then got frustrated at the results and didn’t understand why the other members began to get irritated. Helping to create the Single Market and bringing in poorer countries to the EU but getting angry at the rules that facilitate trade, the migration from poorer countries and the added costs in the budget is all noticed in the rest of Europe and suggests a complete lack of self-awareness by UK politicians.

  6. Blissex says:

    Amazing, to solve the irish issue T May has promised to “align” the UK to both the EEA and the EI, and to avoid a border with nothern Ireland she has also promised that this “alignment” will apply to the whole UK and not just to northern Ireland, and this without getting passporting rights.

    The reactions from the commenters on the Daily Mail are furious, these are currently the two most popular comments:

    Davethejag, Stockton On Tees, United Kingdom, 11 hours ago
    Don’t trust the eu or theresa may and her cronies!
    UP 5703 DOWN 551

    BibleBelieverUK, In Christ, United Kingdom, 11 hours ago
    Thats the look of success for the EU and a sellout for the UK. We’ve been shafted – and its obvious.
    UP 5550 DOWN 263

    The Conservatives are going to lose the 2022 elections as the kippers abstain or go back to voting UKIP.

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