Very quietly, Liam Fox admits the Brexit lie

Liam Fox released a very revealing written statement yesterday. His department has started to do the preliminary work at the World Trade Organisation (WTO) required for when Britain leaves the EU.

Members of the WTO have things called schedules, these are basically a description of your trading relationship with the world. They list things like your tariffs and your services commitments. Britain's are currently held under an EU umbrella and they'll need to be extracted ahead of leaving.

This should be the chance to create that confident, independent, global trading nation Fox and the other Brexiters are always talking about. Finally Britain can construct a trading arrangement which suits it, not the continent.

For instance, we can get rid of the special rule on oranges, which we don't grow but have to labour under because of the Mediterranean states in the EU which do. We can prioritise the sugar cane that Tate & Lyle uses in their sugar, rather than the sugar beet which is used in Europe. We can finally create a customised trading arrangement for this country, rather than one for a continent with which we sometimes share very few economic interests. This is exactly what Brexit was all about.

Except Fox isn't going to do any of that.

"In order to minimise disruption to global trade as we leave the EU, over the coming period the government will prepare the necessary draft schedules which replicate as far as possible our current obligations.[italics added]

It is a startling admission. The UK's extracted WTO schedules will "replicate as far as possible" it's current status. So we'll keep the special rule for oranges, even though we don't grow them. We will continue to protect a sugar process designed for Europe and continue failing to protect one used by one of our major companies, despite its years of lobbying to change the system.

In short, despite all the sound and the fury, despite all the attacks against immigrants and the threats against EU citizens in the UK, despite all the Brexit votes and the Richmond rebellions and the sudden change in this country's political dynamic, the government is not aiming to change anything of any substance. Britain will keep the exact EU tariff system which Brexiters for so long said was strangling it.

Why? Because to do otherwise would be suicide. The WTO has been presented by Brexiters as a safety net, a place to go if no deal is possible with the EU. They keep on saying that they have no concern about falling back on their rules. This is because they don't know what they are.

Any member state at the WTO can trigger a trade dispute with the UK if they feel they have been unfairly treated by a change in its arrangements. And Britain is about to change its arrangement with everyone. It is a major economy extracting itself from a massive trading block. Those disputes are likely to either be resolved by sanctions or concessions on tariffs. If Britain were to lose several of them it would basically be trading under the conditions of injured foreign parties.

So instead Britain will try to rock the boat as little as possible. It will copy and paste all the EU tariffs, whether they suit us or not. It will protect produce it has no intention of making and leave many it does make without protections.

Then it will have to figure out what it'll do with tariff rate quotas, which can't be replicated like tariffs are. Quotas mean that importers pay one tariff for a set amount of a product - say 100,000 tonnes of chicken - and then another tariff for anything above that amount. But this is calculated across the EU, so when Britain takes its tariff rate quota out, it is calculating what slice of the pie it is entitled to. You can't replicate quotas, you have to calculate them.

Tariff rate quotas are so devilishly complicated that they are almost never touched. The EU still operates under quotas from two expansions ago. But Britain is pressed for time, so it will probably take the last three years' trade flows and claim that as the basis for them going forward.

This is as close to a tolerable solution as the UK is likely to find, but look at the incentives on the other side. Brazil exports 480,000 tonnes of chicken to the EU a year, of which about 40,000 goes to Britain. Let's say the British deal on these tariff quotas is unfair. They will trigger a trade dispute. Fine, that's to be expected.

But now imagine the British deal is perfectly fair. What is their incentive? They have the opportunity to open up further market access for their poultry exporters. So they may wish to trigger a trade dispute anyway. Britain will be walking a tightrope, hoping thousands of these disputes don't erupt at a uniquely vulnerable time for it economically. That makes it open to making the changes the other side demands.

This is the case not just for Brazil, but for every single country on earth which exports to the UK. Failure at the WTO level can trigger a global avalanche of trade disputes against us, just as we cut ourselves off from our largest market.

And all of this doesn't even include the EU, which is an independent actor at the WTO, as well as the representative body for 27 of its other member states. They get to present their schedules to the WTO first, because they are much larger. If they disagree with anything we've done, they have a stronger voice in winning that battle. Britain’s extracted schedules will need to be accepted by the EU for it to have any hope of making a seamless transition.

None of this will be mentioned by the Brexiters, of course. In public they puff out their chests and accuse critics of not believing in Britain and thumb their nose at their European counterparts. But in private, well away from prying eyes, they delicately and loyally replicate all of the EU's trading arrangements, just so they stand a chance of setting themselves up in a viable manner at the WTO.

Ian Dunt is the editor of Politics.co.uk. His book - Brexit: What The Hell Happens Now? - is out this week from Canbury Press.

The opinions in politics.co.uk's Comment and Analysis section are those of the author and are no reflection of the views of the website or its owners.

Richmond byelection shock: Theresa May’s Brexit weakness revealed

There is a growing gap between Theresa May’s image and her record. She looks sturdy and reliable - a safe pair of hands. But her actions reveal a track record of unforced errors. She is in a position of acute strategic weakness, both at home and abroad. Last night’s shock victory in Richmond, in which pro-EU Lib Dem candidate Sarah Olney overturned Zac Goldsmith’s 23,015 majority, throws that weakness into sharp relief.

The government insists that the vote doesn’t change anything. Hard Brexit is still going ahead. And in one sense they are right. Richmond is anomalous. Seventy per cent of the voters in this wealthy west London constituency backed Remain in the EU referendum. It’s not politically representative of the country, nor is it socially representative.

And anyway, this wasn't just about Brexit. There were other issues in the Lib Dems' favour. While the scale of the overturned majority is impressive, they did have a track record in this seat. They controlled it in 1997 under Jenny Tong and again under Susan Kramer. It wasn’t until the young, dashing, seemingly independent-minded Goldsmith came along in 2010 that their hold was lost.

It’s possible their focus on Brexit would have failed if Goldsmith himself was less inept. In between the last election and this one he had run an appalling Islamophobic campaign to be London mayor before being roundly and humiliatingly defeated, with even members of his own family publicly disassociating themselves from it.

His campaign in Richmond made very little logical sense. He was running on an anti-Heathrow expansion ticket, but the other candidates were all on the same page so this hardly differentiated him. His pledge to stop the project looked unconvincing given he had failed to prevent it becoming settled government policy. There was no through-line between electing him and securing the thing you wanted.

He ran as an independent, yet the Tories didn’t run a candidate against him and he refused to rule out joining them in future. It all looked a bit shifty and bizarre.

But despite these caveats, the Richmond result does say something important about Brexit. It shows that while Leave won in June, there is outrage from many Remainers at the type of Brexit which is being pursued. A marginal vote has been interpreted in the most radical possible manner, not just by taking us out the EU, but the single market and customs union too. A more modest Brexit proposal would be less likely to stoke anger from voters in places like Richmond.

May has pursued this hard line not out of strength but weakness. She could have offered a more limited proposal, fulfilling the Brexit mandate but trying not to alienate the 16 million Remain voters in the country. Instead, she has been besieged by hard Brexiters in the Tory party, Ukip and the press. She is driving Britain towards a cliff edge, with a chaotic pull-out in two years expected to do untold economic damage to the UK. Until then, she will find herself at the mercy of European negotiators during Article 50 talks. They hold several key advantages over the UK, in terms of the timetable, the consequences of failure, negotiating capacity, and economic clout. Her only contribution to this process was a conference speech in October which limited her room to manoeuvre in Brussels in exchange for short term support from her own party.

May is weak in parliament, weak in the country and weak in Europe. She is weak everywhere. Her response to Goldsmith’s decision to trigger the byelection was to not stand anyone against him. That in itself was a startling admission of vulnerability. Not only did she have to allow a suspension of collective Cabinet responsibility over Heathrow but she had to swallow Goldsmith’s vanity byelection, and then allow him to run unopposed. And she still lost. Her wafer-thin majority has been sliced down by two.

Westminster insiders’ instinctive response to the prime minister’s Brexit difficulties is to suggest that she goes to the country, but today’s result hints at how dangerous that could be. Sure, the polls currently look like the Tories would win a thumping majority, and it is likely they would. But given the results of the 2015 general election, the Brexit vote and the US presidential election, only the brave or the foolish would feel especially reassured by that. After all, a few weeks ago Goldsmith was enjoying a 27-point poll lead over his Lib Dem challenger.

Politics is in flux. Things are strange and unpredictable. Going to the country would be a higher stakes gamble than one might think. And even that would only take place after a potentially dangerous period in which May would need to declare no confidence in her own government and allow the requisite time for other parties to try to form a government.

This is the situation May is in. She is provoking anger from half the voting public because of a hard interpretation Brexit which she is anyway only adopting to fight off fundamentalists in her own party.  She has a tiny majority. She faces big obstacles to holding an election. And ahead of her is a brutal European negotiation process in which she has very few cards to play and in which those she has played have been to her detriment.

For now, her polling stays strong and the public still seem to like her. But her position is extremely precarious. Richmond offers a sneak peek at the reality of her predicament.

Ian Dunt is the editor of Politics.co.uk. His book - Brexit: What The Hell Happens Now? - is out this week from Canbury Press.

The opinions in politics.co.uk's Comment and Analysis section are those of the author and are no reflection of the views of the website or its owners.

Immigration stats: The last hurrah of a successful country

There's now a tradition about reporting UK immigration stats. They are treated as a human version of a natural disaster, like flooding. Politicians come out to pass the blame. David Cameron's foolhardy promise to get the numbers down to the "tens of thousands" - itself completely arbitrary - is usually cited. Now it is likely to be replaced by Theresa May's commitment to the same aim, which was marginally more foolish on the basis that it was not even arrived at in error.

No-one says the reality, which is that these figures are proof of the extraordinary success of multicultural Britain. This is a country where people want to live, to work and to study, and somewhere they escape to when they are faced with hardship or oppression. When they come here, they become more British, in their their values and their manner. This is part of the patriotic mechanism through which British principles and the British way of life can be spread throughout the world - not by the gunboat, but by the process of admiration and emulation.

Irony, individual freedom, moderation and stability are part of the British DNA. They are much sturdier than the anti-immigration forces believe. They believe that the British personality is diluted by the arrival of new people. Clearly they have very little faith in this country. It is Britain which changes those within it and it changes them invariably for the better. The world will be a better place when more people think according to the instincts of the British.

Most people come here to work. 311,000 arrived this year to do so, 182,00 with a definite job and 130,000 looking for work. We need them. The Office of Budget Responsibilty forecast in this month's autumn statement suggested that we would need to borrow an extra £16 billion by 2020/21 to make up for a reduction in immigration. After that it'll cost us an additional £6 billion a year. If we really were to cut down immigration to the tens of thousands, our debt-to-GDP ratio would nearly double on its current forecasts.

That's why we have these numbers coming in. Look at the composition of the migrants. The numbers of non-EU migrants are almost identical to the number of EU migrants, at 196,000 to 189,000.

If immigration really was out of control, why would the government not be hammering down the numbers of non-EU migrants, given that that is an area it has control over? These numbers have reduced slightly, but the fact they are almost equivalent to EU numbers suggests that - free movement or no free movement - Britain needs its newcomers.

Those numbers stay high because the government understands what it is too spineless to admit in public: we need migrants to pay for our aging population. We need them to work and pay taxes so we can run our public services without reaching dangerous levels of debt. That is not an opinion. It is a fact. One of the old-fashioned things which we're not allowed to talk about anymore because to do so somehow disrespects the prejudices of voters.

But while you can ignore politically inconvenient truths, you can't ignore economic reality. There is no immigration crisis. There is no lack of control. There is supply and demand. And there is a country, with debt, with high costs for public services, with an aging population, which desperately needs young, working age people from across the world to come and work. And which can use the opportunity of hosting them - whether for a couple of years or their entire lives - to spread the British way of life, a way of life which would dramatically improve the world if it was replicated elsewhere.

In all likelihood, these figures are the high water mark of the British immigration story. The pound has fallen in value, making remittance payments less desirable. Demographic changes and economic performance in exporter countries would probably lead to a reduction in their own right. Once hard Brexit hammers manufacturing and financial services, we will be significantly worse off. There will be fewer jobs and fewer people will then come for them. Our active attempt to make being a student here unpleasant and unwelcoming will lead to further reductions in their numbers, which are already falling.

But it won't just be that. People overseas have seen the reports of racial and xenophobic abuse in the wake of the Brexit vote. They have seen our politicians talk ominously of "our own population" or of 'naming and shaming' companies that hire foreign workers. A country once considered a beacon of tolerance, stability and decency now looks insane, self-harming and vicious. The ability to spread British values has dwindled because we ourselves appear to have given up on them.

The figures today are discussed in universally negatives tones, but they are a testament to the success of what modern, multicultural Britain could do. Now the authoritarian right is in charge. They are trashing our reputation and ruining our economy. Soon, we will look on figures like this as a memory of the good times, when we had the luxury of complaining about the things which benefitted us.

Ian Dunt is the editor of Politics.co.uk. His book - Brexit: What The Hell Happens Now? - is out this week from Canbury Press.

The opinions in politics.co.uk's Comment and Analysis section are those of the author and are no reflection of the views of the website or its owners.

 

Latest entries