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No deal just became the most attractive way forward

By David Campbell Bannerman, Chairman of The Freedom Association

Very soon a choice will have to be made: whether to continue negotiating a trade deal with the EU or to end negotiations and to prepare for ‘no deal’/Australia deal/WTO rules.

The way the EU has behaved has made no deal much more attractive. What they have done is to narrow the gap between the advantages of a free trade deal, with zero tariffs and quotas, and that of working under WTO Rules, to such an extent that having such a thin deal laden with all sorts of restrictions and continued ties is the greater risk. This is encapsulated in what they call cheekily ‘Level Playing Field’ rules, but what are in effect the EU forcing us as an independent sovereign nation to follow the rules they set, including new ones we have no say or voice on. 

Now, if we had opted for an ‘EEA’ type solution such as Norway’s then we would be signing up to such an arrangement. Norway has to follow all EU Single Market legislation with no voice and little influence. It kicked up a fuss on one Directive – on Postal Services, but even that rare challenge was overturned. EEA also means no control of immigration, which is a no-no post our Referendum. 

This is why we went, after much debate, for a free trade agreement relationship with the EU because it is looser, more arm’s length, less prescriptive, and means we are out of the Single Market and Customs Union, with its rules.

I say this as someone who has pushed for an excellent free trade agreement – what I have called ‘SuperCanada’, that is bigger, better and wider than the EU-Canada deal CETA – for years now. It is what Boris Johnson has called for – he used my term ‘SuperCanada’, as did Jacob Rees Mogg, after I presented to the ERG on the proposals in September 2018. I wanted a SuperCanada deal not just for our benefit, but for that of our EU colleagues and friendly nations. 

This is basically what the EU concluded was the only deal possible right from the start post-Brexit, and has been offered three times – by the previous President of the EU Council Donald Tusk and by Mr Barnier himself.

On 7th March 2018, after coming to Number 10, Tusk said: “I propose that we aim for a trade agreement covering all sectors and with zero tariffs on goods. Like other free trade agreements, it should address services. I hope that it will be ambitious and advanced.” Ambitious means wide and with as few tariffs or barriers as possible.

And Barnier himself said, “It is possible to respect EU principles and create a new and ambitious partnership. That is what the European Council has already proposed in March [as above, 2018]. The EU has offered a Free Trade Agreement with zero tariffs and no quantitative restrictions for goods. It proposed close customs and regulatory cooperation and access to public procurement markets, to name but a few examples.

"On security, the EU wants very close cooperation to protect our citizens and democratic societies. We should organise effective exchanges of intelligence and information and make sure our law enforcement bodies work together. We should cooperate to fight crime, money laundering and terrorist financing. We can cooperate on the exchange of DNA, fingerprints, or Passenger Name Records in aviation to better track and identify terrorists and criminals. We are also ready to discuss mechanisms for swift and effective extradition, guaranteeing procedural rights for suspects.

"If the UK understands this, and if we quickly find solutions to the outstanding withdrawal issues, including the backstop for Ireland and Northern Ireland, I am sure we can build a future partnership between the EU and the United Kingdom that is unprecedented in scope and depth.”

Yet on 18th February 2020, the same Mr Barnier suddenly declared “we remain ready to offer the UK an ambitious partnership” (partnership in EU terms normally means embracing non-trade affairs such as defence, security, judicial cooperation or foreign policy). The EU has suddenly noticed the UK is geographically close to the EU after 47 years and has reduced the partnership “unprecedented in scope and depth” to “a trade agreement that includes in particular fishing and includes a level playing field, with a country that has a very particular proximity – a unique territorial and economic closeness – which is why it can’t be compared to Canada or South Korea or Japan.

So just after we had left the EU on 31st January 2020, the EU moved the goalposts and took away a comprehensive free trade agreement, instead offering a partnership agreement which was not comparable to the kind of FTAs the EU had concluded, and which Lord (David) Frost has cleverly kept the UK’s requests very closely aligned to. The EU weren’t willing to offer the FTA they offered 3 times before because we were now considered geographically close! No wonder several of our top Brexiteer lawyers, including Bill Cash in the Commons recently, regard this as ‘bad faith’ in legal terms, which could in theory invalidate the Withdrawal Agreement itself, as our payments and approach were grounded on receiving an FTA. 

So, it is bad faith and a huge misunderstanding by the EU of the realities of the balance of power in trading terms that has brought us to this impasse. As in the Referendum, the EU makes the cardinal mistake of believing its own propaganda: they think that because the EU nation economies put together are bigger than the UK’s, that they hold all the cards. This is supported by our mainstream media, such as the BBC.

But the reality is that the UK is just about to become the EU’s second largest trading partner after the USA. We are the world’s fifth largest economy, the same size currently as India; 20% larger than Russia. If tariffs are imposed in no deal, the EU will be paying £12-13bn a year and the UK only £5bn. Actually, although 43% of our exports go to the EU (57% to the Rest of the World notably), only 7.5% of GDP – of our economy – is exports of goods and vulnerable to EU tariffs.

The EU has a £95 billion goods surplus with the UK, mostly on tariff heavy agricultural and manufactured goods, and though the UK has a £13bn surplus in services, these don’t have tariffs on them, though are subject to licensing such as EU financial passporting, which UK institutions have already worked around. 

So, the reality is that the EU needs a trade deal with us more than we do with them. Not something you hear very often.

If we go to no deal/Australia/WTO Rules, then it is worth remembering that two-thirds of the world trades under WTO Rules, and that the USA and China export more to the EU than we do. So much for geography! Also, most countries do Free Trade Agreements from a WTO Rules position – the recent EU-Japan FTA took Japan and the EU out of a WTO rules position. 

If we are trading under WTO Rules, and the EU is hurting from £13bn a year tariffs, with job losses from these – remember the UK Market employs over a million Germans, half a million Dutch, 400,000 French people – then far from the UK rushing to do a deal, as the French arrogantly claimed, the EU would be under the cosh most. 

By the time a UK-EU FTA is signed – perhaps even finally that SuperCanada style of deal – the EU could have lost a huge chunk of that £95 billion goods surplus from ‘reshoring’ within the UK, from returning manufacturing jobs in food, drink, car parts, steel, trains and from ‘import substitution’ to UK producers or non-EU suppliers from all round the world, such as our Commonwealth, driven by less red tape and the massive surge in UK Free Trade deals Liz Truss has rolled out.  

Whilst we are not protectionist as an organisation, a resetting of the UK’s trading position with the EU, as President Trump reset relations with Mexico and Canada (replacing NAFTA with the USMCA FTA) might be in order, and allow us to redirect our trading markets and suppliers away from an EU focus. 

In short, we shouldn’t be worried if no deal occurs at the end of the year. It will affect only 7.5% of our economy directly by tariffs, and where those are high (many are low or zero rated anyway), those sectors can obtain legal support under WTO rules: farming directly and manufacturing indirectly, such as through aid for Research & Development. The EU Single Market has not suited us at all well since 1992, and a short sharp shock of rebalancing the trading figures would be no bad thing. 

So, let’s not allow the latest Project Fear hysteria to detract us. We should not be signing a deal that ties our hands on EU laws, keeps us in a regulatory straightjacket and seeks to seize our sovereign fishing waters under UN, not EU laws. Boris Johnson is holding firm on our sovereignty and we should stand right beside him and with those principles if we have to go to no deal.


WATCH a webinar we hosted in October: What‘s stopping a trade deal with the EU and is no deal better anyway?

Answering the questions were: David Campbell Bannerman, Chairman of The Freedom Association, a former MEP and international trade expert; Martin Howe QC, a leading barrister in the fields of intellectual property and EU law; Rt. Hon David Jones MP, Conservative MP for Clwyd West, and a former Minister of State at the now defunct Department for Exiting the European Union; Lee Rotherham, Director of think tank The Red Cell and a Common Fisheries Policy expert; and Barney Reynolds, a partner at Shearman & Sterling and the author of 'A Blueprint for Brexit: The Future of Global Financial Services and Markets in the UK' and many other publications.

The webinar was chaired by Alex Deane, a public affairs consultant and political commentator

 


WATCH: Lord Moylan speaks in defence of the United Kingdom during Committee stage of the Internal Market Bill.

Freedom Association member and Conservative Peer, Lord Moylan, gave a great speech yesterday during the fifth day of the Committee Stage of the Internal Market Bill in the House of Lords. Here is an extract:

"What we face is a determination, dating back to 2016, that the EU take economic control of Northern Ireland, despite the fact that even that is contrary both to the Good Friday agreement and the EU treaties themselves, all of which recognise that Northern Ireland is fully part of the sovereign territory of the United Kingdom. I am afraid that too many Members of your Lordships’ House have adopted that view. My own view is that I do not agree with them and that it would be nice if a few more Members of the peerage of the United Kingdom actually spoke up for the United Kingdom."

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EU talks should be suspended. Read our joint letter in the Daily Telegraph

The Freedom Association was a co-signatory of a letter published in yesterday's Daily Telegraph. In the letter, which was coordinated by Brexit-Watch.org, we call "for the UK Government to suspend talks until the EU recognises the UK’s sovereignty." Here it is in full:

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The siege of London: a capital at odds with its country over Brexit

The following was written for this series of essays, published in January of this year, by Daniel Moylan, a former adviser to Boris Johnson as Mayor of London, and who could take charge of Brexit policy if Boris becomes Prime Minister. 

London has long shrugged off the brooding sense of resentment other parts of the country sometimes feel at its dominance of national political and economic life. After all, the capital, with over eight million people, is a social eco-system of its own, caught up in its own affairs and confident that its net contribution to the Government coffers (over £26 billion a year) is sufficient answer to any regional chippiness.

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"Labour has betrayed its heartlands" 'Better Off Out' responds to Labour's decision to back a second referendum and campaign for Remain

Responding to the announcement this morning that the Labour Party now backs a second EU referendum and will campaign for Remain, Andrew Allison, Head of Campaigns, said:

"Today's announcement is a betrayal of all those Leave voters who have stuck with the party through thick and thin, and is a betrayal of the promises the party made in its manifesto in 2017. 

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Enemies of the people and democracy. This Remainer Parliament just doesn't care how much damage it does

After the Government was defeated in the final vote last night (the main motion as amended), Sir William Cash made the following point of order:

"The right hon. Member for Twickenham (Sir Vince Cable) just said that this was a constitutional innovation. I think he may have rather underestimated the fact that it is in fact a constitutional revolution, and the House will come to regret it". 

And regret it they will. When you play with fire, expect to get burned. Here are the names of the 30 Conservative MPs who voted for the Letwin amendment to wrest control of the Brexit process from the Government: 

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Macron reminds us why voting to Leave the EU was the right decision

Pres. Emmanuel Macron has an ego the size of France. You would think that he has enough problems at home without wading in elsewhere, but this arrogant man just can't help himself. 

"Citizens of Europe, I am addressing you because time is of the essence", is what he posted on Twitter. Monsieur le Président has spoken. He linked his tweet to an open letter published on the Élysée's website. In it he said:

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Next Tuesday's vote in the Commons could be more decisive than any we've had so far

The following is today's Brexit bulletin sent daily to all members of The Freedom Association. To join, please click here

Theresa May's Plan B looked very similar to Plan A because it was Plan A in disguise. Not heavily disguised - there was just a little bit of tinsel around it to make it look slightly different. Next Tuesday, MPs will debate a Government motion that the House has considered the written statement laid before it yesterday. All very vanilla. This motion, of course, will be amended, and the amendments have already started rolling in. 

Arch-Remainer Hilary Benn, the chairman of the Brexit Committee, has tabled an amendment calling for a series of indicative votes. He called for this in his question to the PM yesterday. Dominic Grieve, who can barely be described as a Conservative MP these days, has tabled an amendment that would give MPs the chance to back different Brexit options, including a second referendum. But the amendment that everyone is talking about is the one from Yvette Cooper, which is backed by people like Nick Boles, Oliver Letwin and Nicky Morgan. 

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Clean Break, Bright Future: Leaving the EU, rejoining the World

 

The Freedom Association's 'Better Off Out' campaign has today published six essays that present the positive benefits of a clean Brexit - not just for the UK, but also for free trade across the Commonwealth and the world.

Click here to read them

There are contributions from Ruth Lea CBE, Economic Adviser, Arbuthnot Banking Group; Daniel Moylan, Former adviser to Boris Johnson as Mayor of London; Chloe Westley, Campaign Manager, TaxPayers' Alliance; Andrea Jenkyns MP, Conservative, Morley and Outwood; Ross Thomson MP, Conservative, Aberdeen South; and Chloe Schendel-Wilson, former Parliamentary researcher and Conservative activist. 

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Conservative Eurosceptics present a better deal and a better future

Senior Conservative MPs are this evening setting out the alternative written ministerial statement that they believe the Prime Minister should make now that the Withdrawal Agreement and Political Declaration have been rejected by the House of Commons.

A Better Deal and A Better Future includes the following:

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